4.4.1 The Impact of MNC's Flashcards Preview

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Flashcards in 4.4.1 The Impact of MNC's Deck (7)
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1
Q

what is an MNC

A

a multi-national corporation is a business that has branches or departments in more than one country

2
Q

what are the positive effects of an MNC on local economies

A

+ create jobs
WHICH improves the standard of living and average wage
THEN more money can be spent in local firms/businesses
+ improved infrastructure

3
Q

what are the negative effects of an MNC on a local economy

A
  • if the MNC brings employees with them it may but strain on the local community
  • competition for staff may force local firms to increase their wages which they can’t afford
  • increased competition for local firms
  • creating pollution and waste due to little emotional investment in the country
  • imposing on culture, reduces tourism
4
Q

what are the positive effects of an MNC paying tax

A
  • an MNC will have to pay tax on their exports, profits and their land
  • this money that the government aquires through taxes can be spent on improving infrastructure, schools or healthcare
5
Q

what are the potential problems with governments relying on tax from MNC’s

A
  • MNC’s will use tax avoidance, which is using legal accounting methods to reduce the amount of tax they pay
  • the host country may feel they can’t enforce legislation to prevent this as they fear the MNC may relocate
6
Q

what are the positive effects of MNC’s on the national economy

A
  • more trained staff and better technology
  • MNC may invest in their suppliers with training or technical help
  • MNC’s may be able to offer cheaper products for consumers
  • MNC’s increase the level of entrepreneurship
7
Q

what are the negative effects of an MNC on the national economy

A
  • MNC may send all profits back to their country of origin
  • MNC’s may force domestic firms out of business
  • MNC’s may impose on the nations culture, undercutting traditional businesses
  • industrialisation may reduce tourism