Multinational Firms Flashcards
What is a multinational enterprise?
Firms with operations in more than one country
Why do firms become multinational?
Cheap transport costs
Increase knowledge of local market conditions
Gain cheap labour and raw materials
Avoid trade barriers between countries
Why are multinational enterprises good for host countries?
The business often invests in the country, and creates employment
Countries get money in tax
Host country may learn of new technology ie when Japanese car producers moved to the UK
What problems do multinational firms cause?
Workers work long hours in unskilled jobs for a low wage
The firm may drive out local businesses as it benefits from economies of scale
They may ask the government to spend money to improve infrastructure like roads- these governments are usually poor
