3.9.3 Flashcards
What is a multinational company?
A business that has branches or departments in more than one country.
How do multinationals benefit from operating in multiple countries?
They can produce goods in the most cost-effective way by utilizing different locations.
What is the economic impact of large multinational companies?
Some have annual turnovers larger than the GDP of some countries.
How do multinationals help employment in developing countries?
They increase employment opportunities for the local population.
How do multinationals impact the standard of living in developing countries?
They can increase it by offering better pay and conditions than local companies.
What is Foreign Direct Investment (FDI)?
Money spent by multinationals to build factories and infrastructure in host countries.
How do multinationals contribute to government income?
They pay taxes on land, employee wages, profits, and exported products.
What is an ethical multinational?
A company that pays fair wages and avoids exploiting workers.
How do some multinationals exploit developing countries?
They maximize profits by taking advantage of lower wages and weaker regulations.
How can multinationals exploit labor laws?
By employing child labor or ignoring safety regulations.
Why do some multinationals extract large amounts of natural resources?
To maximize profits, often causing environmental harm.
How do weaker environmental laws in developing countries benefit multinationals?
They allow businesses to pollute more without strict regulations.
What is Corporate Social Responsibility (CSR)?
A commitment by companies to ethical and sustainable business practices.
Why are developed countries attractive to multinationals?
They have stable and growing economies with many potential customers.
How do factories in developed countries benefit multinationals?
They help reduce distribution costs.
How does being in the EU benefit multinationals?
They can sell products across EU countries without paying import tax.
Why do governments regulate multinationals?
Each country has different laws to control and manage business activities.
How do pressure groups influence multinational activities?
They try to persuade governments to regulate multinationals more strictly.
What are two benefits of multinationals expanding into a country?
Increased employment and economic growth.
What are three ways multinationals exploit developing countries?
Low wages, child labor, and environmental harm.
Why might a multinational choose to locate in a developed country?
Stable economy, large customer base, and lower distribution costs.
How can governments manage multinational activities?
Through laws, regulations, and taxes.
What role do multinationals play in increasing a country’s GDP?
Their investment leads to job creation, higher consumer spending, and increased tax revenues, all of which contribute to economic growth.
How can multinationals negatively impact local businesses in developing countries?
They can outcompete smaller local businesses by offering lower prices and better resources, sometimes driving them out of the market.
What are some environmental concerns caused by multinational corporations?
Pollution, deforestation, excessive resource extraction, and contributing to climate change through unsustainable practices.
Why do developed countries attract multinational companies?
They have stable economies, a large customer base, strong infrastructure, and a skilled workforce.
How do governments regulate multinationals in developed countries?
They enforce labor laws, environmental regulations, and tax policies to ensure that multinational companies operate fairly and responsibly.
