4.4.1 The Impact Of MNCs

Question 1

What is an MNC?

Answer 1

A business that has branches in more than one country

Question 2

Which economies are affected by MNCs?

Answer 2

Local and national economies

Question 3

How do MNCs affect local economies positively?

Answer 3

- creates jobs
- increasing local employment improves the standard of living
- MNCs may invest in improving infrastructure which benefits the local community

Question 4

How do MNCs affect local economies negatively?

Answer 4

- if MNCs brings its own labour it could but a strain on the local community and its resources.
- Could force local firms out of business
- Some MNCs may employ children or exploit workers
- MNCs may use unsustainable natural resources which could cause pollution and waste

Question 5

How do MNCs affect national economies positively?

Answer 5

- they create large FDI flows
- if staff leave an MNC to get a new job, their skills will be transferred
- increases the level of entrepreneurship
- MNCs can offer cheaper products due to EOS

Question 6

How do MNCs affect national economies negatively?

Answer 6

- forces domestic firms out of business
- could lead to a loss of national culture