LESSON 1.6

Question 1

Gross domestic product

Answer 1

The value of a country’s annual output or national income

Question 2

Host country

Answer 2

any nation that allows a MNC to set up in its country

Question 3

Multinational company

Answer 3

an organization that operates in 2 or more countries, w/ its head office usually in their home country

Question 4

Protectionist policies

Answer 4

Measures imposed by a country to reduce the competitiveness of imports

Question 5

Define:
Tariffs
Quotas
Non-tariff barriers

Answer 5

• taxes or duties imposed on imports (increases price of goods in domestic market)
• restrictions on the volume of important for a particular product at a particular time
• regulations or practices, other than tariffs, that governments use to restrict international trade

Question 6

NOTE: Protectionism benefits domestic producers much more than domestic consumers

Question 7

Advantages of protectionism

Answer 7

• lowers imports
• increases GDP
• increases jobs
• allows growth opportunity for local businesses to compete with international ones

Question 8

Disadvantages of protectionism

Answer 8

• limited product choices for consumers
• increase in prices due to lack of competition (even if products haven’t improved)
• tech stagnation
• economic isolation

Question 9

Impacts of MNC on Host Companies

Question 10

Advantages

Answer 10

• job creation
• increase GDP
• increase competition (good for consumers)
• tech and knowledge transfer

Question 11

Disadvantages

Answer 11

• don’t take up CSR (exploit natural resources & don’t support local communities)
• repratriation of profits
• could cause unemployment if domestic businesses shut down
• competitive pressure, might force local biz to lower prices/they can’t keep up w/ new tech/knowledge