Final answer:
Expatriates are chosen for international ventures needing managerial experience and company loyalty. They affect long-term foreign direct investment, distinguishing them from quick portfolio investments. While MNCs can offer better wages, they may also exploit labor and resources in host countries.
Step-by-step explanation:
Expatriates are typically chosen for new international ventures that require managerial experience from the parent company and where there is a concern for loyalty to the company rather than to the host country. These individuals bring with them a wealth of knowledge and leadership that is aligned with the company's goals and strategies. Expatriates play a key role in foreign direct investment, where they assume managerial responsibilities and contribute to the long-term focus of the venture. Unlike portfolio investments that can be quickly liquidated through a phone call or a few computer keyboard clicks, direct investments into entities such as a firm manufacturing automobile parts take considerable time to execute due to the complexity of setting up operations in a new country.
Multinational corporations (MNCs) often offer higher wages and better benefits compared to local businesses in developing countries, which can lead to a high demand for positions within these companies. However, by prioritizing private goods, MNCs may choose to operate in countries where they can exploit labor and resources due to weak regulations on minimum wages, health care, labor laws, and environmental regulations.
Notwithstanding the economic benefits brought by MNCs, issues such as the potential for exploiting labor, ignoring local regulations, and focusing solely on profit margins reveal the complexities and challenges of international business practices. MNCs have the capacity to bring good to their host countries but can also operate in a way that prioritizes profits over broader social benefits.