MNC Investment In A Country - Economic Development

Question 1

• the MNC
• where they locate their factories
• where they have their headquarters
• PSD (2)

Answer 1

• Nike
• Vietnam
• Portland, Oregon, USA
• Nike employs 650,000 contract workers in 700 factories
• 75% of Nike’s workforce is based in Asia

Question 2

Advantages for Vietnam (3)

Answer 2

• creates employment in 34 factories
• improves skill level of the locals (by 2001 85% of Nike factories offered education and training programmes to improve literacy rates
• pays a higher wage than most employment in the area eg. farming ($59 per month)

Question 3

Disadvantages for Vietnam (3)

Answer 3

• unstable as investment could be quickly transferred elsewhere (Nike moved factories from South Korea to Indonesia in the late 1980s)
• poor working conditions (11-12 hour days; physical, verbal and sexual abuse)
• concerns about Nike’s political influence

Question 4

Advantages for Nike (3)

Answer 4

• cheap production means more profit (pay $18 a shoe to contractors for production and charge retailers $36)
• quick production (Vietnam produce 75 million pairs of Nike shoes every year)
• fewer laws and regulations on workers rights allow for more profit and quick production ($59 a month wages, 11-12 hour days)

Question 5

Disadvantages for Nike (3)

Answer 5

• long transport time to main market of Europe and USA
• hard to deal with factories all over the world (simplest shoe Nike Air Max Penny made from 52 components from 5 different countries)
• bad publicity (1997 scandal regarding toxic fumes at a Vietnam factory)