TNCs And Globalisation Flashcards
What is globalisation?
The increasing interconnectedness and interdependence in the world, economically, culturally and politically. Most political borders are not the obstacles they once were and as a result goods, capital, labour and ideas flow more freely than ever before.
Causes of globalisation
Growth of TNCs encouraged growth of NICs (reduced labour costs in NICs and LEDCs)
Removal of trade barriers - allows free movement of goods, services and money
Improvements in international transport
Development of technology (particularly internet)
What are TNCs?
A firm that owns or controls productive operations in more than one country through FDI. They can exploit raw materials, produce goods (eg. cars and oil) and provide services (eg. banking).
Positive impacts of TNCs
Help to create jobs for locals
Pay higher wages than local businesses - higher income, better standard of living
Bring wealth to economy - multiplier effect
People learn new skills
Products exported, benefiting the economy
TNCs pay taxes to host country - more money to invest in quality of living
Negative impacts of TNCs
Often make employees work for long hours in poor conditions
Profits sent back to HQ country
Can close factories with little warning, local people made redundant- negative multiplier effect
Fewer laws about pollution, so TNCs can pollute environment without prosecution
TNCs become too important in the economy and may influence the decision made by the government
Manufacturing jobs in MEDCs reduced and many unemployed as TNCs outsource
