impact of globalisation on local and national economies Flashcards
What are MNCs?
Multinational corporations are corporations with assets in multiple foreign countries.
How would investing in foreign countries help the people of that country?
It would create jobs for these people, which could potentially improve their quality of life.
Why would MNCs choose to shift their production processes abroad?
To take advantage of the low cost of labour.
How would local firms benefit from MNCs in that area?
Local firms may supply the MNC with raw materials or other goods, thus increasing their revenue.
Briefly describe Corporate Social Responsibility (CSR).
This is when firms ensure that their actions are beneficial to society.
How could the presence of an MNC hinder the growth of local firms?
If local firms cannot benefit from economies of scale and provide their goods at the same price level as the MNC, they may lose out on revenue which will affect their scope for profit.
How would the local economy benefit from MNCs?
MNCs would increase employment in the area and through the multiplier effect, this would increase spending and lead to stronger economic growth.
Would an increase in exports improve or damage the balance of payments?
This would improve the balance of payments.
Who are stakeholders?
These are anyone with an interest in how a particular business is run.
What do cheap products imply about making those products?
That those workers are paid very poorly.
Why would some countries fear trying to control MNCs?
If they impose too much regulation and red tape, the MNC may cease activities in that country, which could lead to unemployment and less economic growth.
Why would a firm monitor its own behaviour?
It may have high ethical standards.
How might self-regulation harm a firm’s profit?
They may lose out in a competitive market thus reducing the profit potential of a firm.
