TNCs Flashcards
The Changing Industrial Structure and the Role of TNCs
TNCs (Trans-National Corporations) are companies that are located in more than one country, or that buy and sell
products in more than one country. TNC factories are normally located LICs or NEEs where labour is cheaper and there are fewer environmental regulations/employment laws. TNC headquarters and offices are normally located in MICs.
In July 1991, the Indian government opened the doors of the Indian market to TNCs; the number of foreign companies increased from 489 in 1991 to 3191 companies in 2012.
Foreign Direct Investment also increased from US$129 million (1991) to US$ 32 billion (2012)!
Advantages of TNCs
. Improved infrastructure and provision of basic needs in India as this improves business conditions near to where they are operating.
. Local people have more access to the comforts of life with a larger variety of choices.
. Contribution to government revenues through taxation.
. As many as 50 new mobile phone factories were set up in India in 2016, creating employment for 20,000 people. Nine million smartphones can now be produced in India each month.
Disadvantages of TNCs
. More highly paid tertiary and quaternary jobs tend to be in MICs.
. Lower-paid secondary jobs tend to be in LICs/NEEs.
. Increased risk of pollution.
. Mercury contamination in Kodaikanal, India originated at a thermometer factory that was owned by Hindustan Unilever (part of Unilever).
. One water sample from a river near the pharmaceutical manufacturing plants in the city of Hyderabad, in southern India, contained almost a million times the safe limit of antibiotics.
