GS&GG: TNCs

Question 1

Outline the positive socioeconomic impacts of TNCs on their country of origin:

Answer 1

• Cheaper goods as produced at a lower cost = benefits consumers
• HICs can specialise in financial services = higher value
• Increased tax revenue due to profit repatriation

Question 2

Outline the negative socioeconomic impacts of TNCs on their country of origin:

Answer 2

• Deindustrialisation due to global shift of manufacturing > e.g. Detroit
• Structural unemployment

Question 3

Outline the positive socioeconomic impacts of TNCs on their host country:

Answer 3

• Generates job opportunities - average wage 40% higher than those paid by local firms
• Positive multiplier effect = local businesses supply TNC/ investment in infrastructure can encourage further FDI
• Upskilling of workers

Question 4

Outline the negative socioeconomic impacts of TNCs on their host country:

Answer 4

• Poor working conditions/child labour
• TNCs may exert political pressure/undermine the work of the UN e.g. through footloose nature allowing race to the bottom in terms of minimum wages
• Economic leakages/repatriation of profits

Question 5

In what ways to TNCs promote inequality and conflict?

Answer 5

• Take advantage of tax breaks to ensure don’t contribute to the host country (and origin country) e.g. Apple and Ireland
• TNCs often pay higher wages than local firms = local firms may close due to lack of workers
• Increase rural urban migration = rural decline
• Outsourcing = high unemployment in inner city areas of HICs e.g. Detroit

Question 6

In what ways to TNCs promote economic growth?

Answer 6

• Creation of employment opportunities
• Positive multiplier effect (infrastructural improvements/local firms part of supply chain)
• Upskilling

Question 7

Give evidence of TNCs negative impacts on Detroit:

Answer 7

• Increasing unemployment (24.8% unemployed in 2010) = decrease in tax income
• Degradation of the built environment = derelict factories and decrease in public spending (40% of street lights don’t work) (23% of buildings abandoned in 2014)
• Concentration of poverty in inner city due to white flight of urban middle class = suburban housing estates left empty/ closure of department stores etc.
• Out migration of professionals left inner city public services struggling

Question 8

Positive impacts of Apple on Foxconn City:

Answer 8

• Pay higher wages than other local firms
• Use local firms to complete production processes = outsource to local firms can create race to the bottom

Question 9

Negative impacts of Apple on Foxconn City:

Answer 9

• Poor labour practices (race to the bottom) = high suicide rate = 14 workers in 2010
• Reliance on non-renewables/use of toxic chemicals

Question 10

Positive impacts of Apple on Ireland:

Answer 10

• 4000 direct jobs and 2500 indirect
• Migration of highly skilled workforce = improved reputation as a host for tech firms

Question 11

Negative impacts of Apple on Ireland:

Answer 11

• Most highly skilled workers are forign nationals (60% are Irish but mainly on production line)
• Corporate tax avoidance = both US and EU claimed tax avoidance.