MNCs

Question 1

MNC

Answer 1

A business that has its headquarters in one country, and branches and manufacturing in other countries

Question 2

Positive effects of MNCs

Answer 2

Local labour-western training makes staff more productive
Wages-pay higher wages
Working conditions-reputation to keep so provide above average conditions
Job creation

Question 3

Negative effects of MNCs

Answer 3

Local labour-attracts skilled workers who could be working locally
Wages-production where labour costs are low, so they pay relatively low wages
Working conditions-not great compared to the west
Job creation-at expense of local firms

Question 4

Impact of MNCs on local economy

Answer 4

+Economic growth from taxes
+Infracstructure development
+Job creation
-Pollution
-Undermine local businesses
-Leave unsightly production facilities behind once all resources extracted

Question 5

Impact of MNCs on national economy-FDI flows

Answer 5

-Inflow of money into the country

+Initial lump sum of money to pay off investments
+Reinvest in the local economy, generating new jobs
-Assets from the country are now owned by a forging business

Question 6

Impact of MNCs on national economy-Balence of payments

Answer 6

Financial transactions between a country and the rest of the world
+MNCs improve this
+Any good exported for sale by an MNC generates further inflows to the country’s balance of payments
-Can be negative if MNCs import lots of materials
-If MNCs send profits back to their home country, represented as flow of money out the country

Question 7

Impact of MNCs on national economy- Tech & skill transfer

Answer 7

-MNCS bring new tech + skills
-Improves efficiency + productivity
-Domestic business become more competitive nationally/internationally

Question 8

Impact of MNCs on the national economy- Consumers

Answer 8

+ Wider range of choice
+ Lower prices
+Better quality
-Pushes domestic business out of the market, leaving fewer choices

Question 9

Impact of MNCs on national economy- Business culture

Answer 9

+Influences domestic businesses
+ Encourage a culture of entrepreneurship
-Can demostrate unethical behavior

Question 10

Impact of MNCs on national economy- Tax revenue & transfer pricing

Answer 10

+ Host country gains tax revenue, gov can invest this in public services & infrastructure
-MNCs try to reduce their tax liabilities
Transfer pricing- MNCs shift profits from where they are generated to countries with lower tax rates