When this happens, the standard of living and income levels will remain stagnant. (Bhargava, 2006, pp. 341 -- 362) (Cazurra, 2008, pp. 12 -- 27)
Moreover, corruption will increase the costs of doing business inside a particular area. This is troubling, as it will lead to less employers relocating to the region. Instead, they will seek out locations where there are lower amounts of corruption. This is a part of an effort to keep their costs as low as possible so that they can increase their overall returns and remain competitive in the global marketplace. For the region, this will result in less high paying jobs (which helps contribute to an increase in the unemployment rate). (Bhargava, 2006, pp. 341 -- 362) (Cazurra, 2008, pp. 12 -- 27) (Heineman, 2006, pp. 75 -- 86)
How can MNCs deal effectively with these problems?
The ways that MNCs are able to deal with these challenges include: effectively lobbying and making larger commitments to governments that have strong anti-corruption practices. Lobbying is an important tool, in helping these firms to let officials know: who they are and what they stand for. This builds a relationship between the firm and the local government that is based upon mutual trust. At the heart of this trust, is letting the other parties know that various acts of corruption will not be tolerated.
While making larger commitments to regions...
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