Assertion (A): Local businesses may set up a joint production process with MNCs and earn higher profits.

Reason (R): MNCs can provide money for additional investments, like buying new machines for faster production.

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Both (A) and (R) are true and (R) is the correct explanation of (A).

Both (A) and (R) are true but (R) is not the correct explanation of (A).

(A) is correct but (R) is wrong

(A) is wrong but (R) is correct

answer is A.

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Detailed Solution

Both (A) and (R) are true and (R) is the correct explanation of (A).
With globalisation, MNCs entered the markets of many developing countries. Instead of setting up their production, they bought out the existing companies or entered into partnerships with domestic companies. This joint partnership was beneficial for domestic companies as well. Due to partnerships with the MNCs, the local companies had access to more capital and new technology, which increased their efficiency of production and their profits for them as well.

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