4.4 National Impact On MNCs

Question 1

FDI flows

Answer 1

When a MNC invests in a country the scale of the investment is likely to be significant
Countries will offer insentives to get businesses to set up their

Question 2

Balance of payments

Answer 2

Inward investment - investing into the foreign country
A direct flow of cash into the country
Likely import substitution and export promotion

Question 3

Technology and skills transfer

Answer 3

MNCs bring all of there technology, which could be at a high standard if they come from a developed country.
Worker will be high trained to use the new technology and production methods and domestic firms.

Question 4

Impact on consumers

Answer 4

Links to the mark development theory (Ansoffs)
Greater range of choice and prices can be lowered - customer needs are being met more.
MNC may have lower costs of production - pass that onto the customers.

Question 5

Impact on business culture

Answer 5

MNCs bring the cultures into a new country - It could dilute tastes in the local area.
George Ritzer ‘Mcdonaldisation’- American fast foods has gone all over the world.

Question 6

Impact on tax revenues

Answer 6

Tend to set up where there is less tax for more profits.
Transfer pricing used for mnc’s to avoid larger taxes in bigger countries
Christian Aid estimates developing countries lose 160 billion of tax revenue. If MNCs put their HQ there they would not lose out.