theme 4.4

Question 1

4.4
define MNC

Answer 1

• multinational corporation
• a business that operates in more than one country

Question 2

4.4
what are some positive effects of MNCs on local economies

Answer 2

1. creates employment for local people
2. increases skill base so other firms will be attracted to the country
3. increased standards of living by increased earnings=increased taxes=gov. spend money on more services
4. raises countries profile as pro-business and politically stable
5. improves balance of payments as goods are exported which increases capital earned
6. improves infrastructure e.g communication links are expanded

Question 3

4.4
what are some negative effects of MNCs on local economies

Answer 3

1. profit leakage= profits from factories go to the home country of the MNC
2. low paid jobs for local people
3. MNCs pull out quickly leaving locals unemployed
4. poor safety records- developing nations have lower safety standards & gov. are willing to turn a blind eye to laws being broken
5. increases urbanisation due to jobs being created in urban areas= overcrowding
6. widens poverty gap as cost of living increases

Question 4

4.4
positive and negative of MNCs on local labour

Answer 4

• provides jobs for locals which increases their income to spend in local shops = increase local demand
• exploitation with low wages and poor conditions

Question 5

4.4
positive and negative of MNCs on wages

Answer 5

• tend to pay higher than local businesses so local business can’t compete with wages
• wages rise long term which improves economy on host nation

Question 7

What is the impact of MNCs on the local economy wages

Answer 7

• MNCs tend to pay higher wages than local business so local businesses can’t compete with wages
• in the long term wages rise so economy may improve in host nation

Question 8

What is the impact of MNCs on the local economy job creation

Answer 8

Moving into a developing nations are an excellent source of employment

Question 9

What is the impact of MNCs on the local economy on local businesses

Answer 9

• the local population gain employment their income rises and they can spend their disposable income at local businesses
• local businesses can’t compete with the MNCs low prices and range of new products

Question 10

Impact of FDI on national economy

Answer 10

• great scale of investment
• governments can offer grants in order to attract MNCs investment
• can be used for infrastructure, employment, staff training

Question 11

What is the definition of balance of payments

Answer 11

Difference between all money flowing into the country in a particular period of time