_1.       Harm domestic firms. Local companies may not be able to compete directly with multination that possess everything e.g. management skills, tendency to be more productive efficiency, marketing strategies etc. As such, they could be out of business and this may result in bankruptcies which surface along with unemployment. Also-local suppliers of raw materials, capital goods etc may be worse off if these MNCs decide to buy them from overseas

_2.       Crowding out effect. Although MNCs provide capital, large numbers of them do raise financial needs domestically. In LOCs, available funds for investment are already limited, With the presence of MNCs, competition for limited amount of fund will eventually bid up interest rates, thus crowd out local investment and private consumption. From macroeconomic perspective, although AD in theory is said to increase due to investment by foreign firms, somehow it is offset by the fall in both local investment and consumption. AD and therefore economic growth may not increase that much after all.

_3.       Worsen both current account and financial account. Although the initial impact of MNC investment is to improve the foreign exchange position of recipient nation, its long run impact may reduce foreign exchange earnings on both current and capital accounts. The current account may deteriorate as a result of substantial import of intermediate products and capital goods. Meanwhile, capital account may worsen because of the repatriation of profits and other funds back to their home country.

_4.       Contribute little to tax. Although MNCs do contribute to public revenue in the form of corporation tax, their contribution is considerably less than it should be due to liberal tax concessions, excessive investment allowances and practice of transfer pricing. Transfer pricing is a situation where MNCs inflate the price it pays for intermediate goods bought from overseas affiliates. In this case overseas affiliate will register higher profits while that, MNC will register lower profits. This is because that MNC could be operating in a high tax LDC and while its affiliate operating in a low tax LDC. As such it's like some sort of 'profit-transferring'

_5.       Unemployment not solved. Since most MNCs originate in more-developed countries, they tend to use technology that suits the conditions with which they are familiar. In many cases, these will tend to be relatively capital-intensive, which may not be wholly appropriate for LDC factor endowments e.g. large pool of labourers. As such 'employment may not be created or perhaps limited to relatively low-skilled jobs

_6.       limited spillover effects. Those MNCs may make use of local unskilled labour but hire expatriate skilled workers and managers. As such there could be of minimal spillover effects to local economy. Another possibility is that, MNC may pay Wages that are higher than necessary to maintain good public image and to attract best local talents. This is fine for workers lucky enough to land on such job, but it can cause great difficulties to local companies to maintain their best workers. Yes, they could increase the wages but at the expense of increase in production costs

_7.       Worsen rural-urban migration. MNCs tend to locate in urban areas, usually the capital city of LDCs, unless they are purely resource seeking in which the case they may be forced to locate near the supply of natural resources they are seeking.

Locating in urban areas may aggravate the rate of migration. This will potentially cause 2 major problems. First, if the job expansion cannot keep up with the high migration rate, we will witness urban unemployment which leads to other problems like shanty towns. Secondly, higher incomes earn in urban may result in the widening of income inequality between urban-rural areas

_8.       There are other problems as well. Powerful MNCs may exert their power so as the government bows to their need e.g. more favourable tax rate, greater investment allowances etc. Also MNCs may produce growing number of higher income groups with high propensity to buy imports and low propensity to save locally.

_9.        Demand for excessive concessions from: government They tend to demand many privileges such as tax holidays, subsidies, etc. thus they turn out to be a burden;

_10.    Over exploitation of domestic resources. Due to use of modern efficient technology, MNCs over exploit resources of LDCs leading to resource depletion.

_11.    Provide no linkage in the economy. The industries established by MNCs use imported raw materials, thus" do not provide market for agricultural raw materials produced in LOCs. Therefore these industries cannot support agriculture and other sectors to grow.

_12.    Promote influence of their government in the host country. MNCs may promote the interest of their home country thus leading to neo-colonialism and its associated problems.          

_13.    Exploitation of consumers. MNCs demand a lot of protection against foreign competition. This gives them monopoly position which they use to exploit domestic consumers.