impact on MNCs

Question 1

what are MNCs

Answer 1

MNCs are businesses that operate or have assets in more than one country

Question 2

impact of MNCs - employment

Answer 2

can create employment in a number of ways
investment creates employment in hose countries as buildings and equipment may be needed
workforce is needed
local business could increase by selling to the MNCs
people who are employed by MNCs spend their income for local demand
however local businesses may suffer

Question 3

impact of MNCs - wages and working confitions

Answer 3

cheap labour is important for MNCs but many pay higher than average wage in host country
paying well increases motivation and productivity
however
wages can be low and working conditions poor
health and safety is often poor
child labour may be exploited

Question 4

impact of MNCs local businesses local community and the environment

Answer 4

new business may outsource using local businesses to provide extra services such as cleaning
training may lead to technology transfer
however businesses may use their power and minimise contributions to the local community
could lead to pollution

Question 5

impact on MNCs on national economy

Answer 5

growth of business activity can stimilate whole economy
increase wages should enlarge tax base and increase revenue
increased government expenditure could benefit the wider population

Question 6

impact of FDI flow

Answer 6

when one country brings FDI into the economy other MNCs will be less worried about locating there
increasing wealth comes the ability to invest and spend government can invest on infrastructure
flows of FDI will tend to raise the exchange rate

Question 7

impact on the balance of payments

Answer 7

shows the money going into a country compared to the money coming out of a country
when MNCs arrive it invests capital to create production facilities bringing inflow of FDI
this could offset the current account balance
on the other hand MNCs may import raw materials

Question 8

technology and skill transfer

Answer 8

mnc many require skilled workers and train the local workforce
they might acquire useful skills if they were to move on
mncs bring new technologies
however they may not train local people to a high level
locals may only get unskilled jobs
r and d facilities may be in the home country

Question 9

impact on consumers

Answer 9

incomes may rise

however in emerging economies they may need to pay for welfare policies

Question 10

impact on tax revenues

Answer 10

increase wages should enlarge a tax base and increase govt revenue
which could benefit the wider population
however profits can be repatriated to home country