Lesson 4 Flashcards
Why is FDI attractive to investors? (6)
Wage rates - cheaper employment opportunities
Labour skills - better work force
Size of economy & population - wealthier market/produce useful
Political stability - little risk of war
Raw materials - Easy to access, cheaper
Physical location - climate, landlocked, accessible
What is an EPZ
A small industrial area often on the coast where favourable conditions are created to attract foreign TNCs.
What are favourable conditions? (2)
low tax
exemptions from tariffs & export duties
What does technopoles mean?
Technologically innovative businesses and research industries
What is the multiplier effect?
Other firms may gain business supplying parts, the increase spending power of the workers stimulates the service sector and higher tax revenues may be invested in education and infrastructure
What is business clustering?
A industry occurs in one place.
How does China have political stability?
Communist party been in power since 1949
How does the market have potential?
it is emerging as people are becoming weather
How does china have a positive image?
used 2008 olympics to rebrand itself as wealthy and optimistic
How is the currency stable?
Exchange rates are stuck to US $ - less risk of losses
How is china attractive to TNCs?
Good infrastructure and government banking
What os SEZ?
Special economic zones where businesses can import raw materials & export them by paying reduced tariffs
Why is cheap labour good?
Reduces costs & maximises profits - long term spending on heath care provides a healthy work force
Cheap freight?
Shipping fees were low in early 2000s however there is now a shortage and large volumes get priority, low prices allow TNCs to outsource manufacturing to far places
