4.4.1 Impact Of MNC’s

Question 1

MNC’s arrival in local communities is welcomed because?

Answer 1

Creates jobs and generates contracts in supply chain for local businesses

Question 2

Job creation

Answer 2

Establishment of a new factiory can create hundreds of jobs for local community
OPPs for development of skills and growth of pop as people choose to relocate to work at factory
Growth may generate demand for local businesses as well

Question 3

Wages n working conditions

Answer 3

Increases demand for labour in local area = create competition for skilled workers if unemployment is low
If supply does not increase sufficiently to meet demand, wages will rise and quality of working conditions will

Question 4

Local businesses

Answer 4

Large MNC will have a supply chain made up if smaller local businesses
Large production facility = I love hundreds of smaller suppliers of components and services
Create new OPPs for entrepreneurs in area

Question 5

Local Community and environment

Answer 5

A large MNC is likely to cause neg externalities in local community + en
E.g congestion (demand of g/s exceeds supply)
Pollution
To counteract - MNC may invest money to enhance local area (build parks or comm facilities or support local schools)

Question 6

National context - fDI flows

Answer 6

When an overseas business locates a factory, officies or a facility in a foreign country it invests a huge amount of cap into that country (fDI)
This investment = spending in economy which creates jobs and lowers level of unemployment - fDI creates wealth in a country

FDI may lead to reduction in national debt
Increased employment
Increased incomes
Increased tax ev

Question 7

Balance of payments

Answer 7

Initial fDI flow = boost to balance of payments in a foreign country, but products and services created by the MNC may also be exported around the world

Question 8

Tech + skills transfer

Answer 8

An MNc may have created success through developing new tech + processes in its home nation
Also train and develop the knowledge/skills of it workforce

Question 9

Consumers

Answer 9

Introduction of MNC will increase level of comp within national industry
Neg consequences tho such as:
Lower prices
More choice
Improved quality
Better living standards (wider range of products to meet needs)

Question 10

Culture

Answer 10

Way busi does things
Naturally transfer to local businesses through growth of mnc’s
Working practises/decision making

Question 11

Transfer pricing

Answer 11

Where an MNC will ensure it is selling products through a country with the lowest tax levels
MNC’s sometimes operate across country’s to avoid paying high tax levels