MNCs role in Sustainable Development and Low Income Countries

Question 1

FDI

Answer 1

Foreign Direct Investment (FDI) - investment by a firm based in one country (the home country) in productive activities in another country (the host country).

Question 2

MNC

Answer 2

Multinational Corporation (MNC) or Transnational Corporation (TNC) - a type of corporation in which its organization operates in two or more countries.

Question 3

How important is FDI to lower income countries?

Answer 3

• MNCs are mainly responsible for Foreign Direct Investment
• MNC investment is very important for any country’s economy.
• FDI is the largest source of investment for low-income countries

Question 4

Role of MNC’s in low income countries

Answer 4

• They are another form of powerful institution that, depending on the company and the situation, can bring immense benefits for a country or be a hugely destructive entity that contributes to systemically low income jobs and environmental destruction.

Question 5

Advantages of MNC’s in low income countries

Answer 5

1. Can create massive numbers of jobs within a country
2. Can, as a whole, contribute to economic growth for the country
3. Can, depending on the MNC, pay relatively higher wages than its local competitors

Question 6

MNCs negative impacts in low income countries

Answer 6

• practicing unfair competition with unsafe working conditions
• very low/exploitative wages enabling systemically low income outcomes for people
• accusations of violating human rights and labour rights
  eliminating local producers and local jobs
• environmental degradation through working in countries with weak environmental protection laws

Question 7

What is the role of the World Trade Organization?

• what?
• goal
• run by?

Answer 7

• The World Trade Organization (WTO) is the only international organization that deals with the rules of trade between nations
• Their goal is to help producers of goods and services, exporters, and importers to conduct their businesses
• The WTO is a democratically-ran forum for governments to negotiate trade agreements and settle trade disputes

Question 8

How can MNC’s be more sustainable and support better working conditions?

Answer 8

• Taxes place on amount of carbon produced
• Environmental regulations on plastics, etc.
• Corporate fines for violating regulations
• Adhering to their responsibilities to help meet emissions targets in global agreements (e.g., the Paris Climate Accord)