4.4.1- The Impact of MNCs

Question 1

multinational

Answer 1

called a transnational corporation is a company that owns or controls production or service facilities in more than one country

Question 2

are MNCs good for poorer countries

Answer 2

• incoming internationals bring FDI (foreign direct investment)
• creates jobs
• increases competition
• any extra output sold abroad therefore will increase exports
• an efficient multinational might make high quality products available at lower prices than previous

Question 3

why would MNCs grow

Answer 3

• to expand to foreign markets and domestic markets may be saturated
• extensions strategy for products

Question 4

Foreign Direct Investment

Answer 4

• investment of foreign money into domestic structures, equipment and organisations in the host country
• creates stable, long lasting links between foreign economies
• can be used as funding for the development of the economy of the host country

Question 5

positive impacts on local economies

Answer 5

• improves infrastructure
• creates employment
• increased skills base
• increased standard of living
• improves balance of payments
• raises country’s profile

Question 6

negative impacts on local economies

Answer 6

-profit leakage
-low paid jobs
-widens the poverty gap
-increases urbanisation
-poor safety record
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