World Trade and Transnational Corporations

Question 1

modernisation theory’s view of trade and the role of TNC’s in development

Answer 1

TNC’s link LDC’s with the world market

being wealth, jobs, skills and technology to poorer countries

pays higher wages than local businesses

introduce modern norms and values into traditional culture

Question 2

neoliberalism’s view of trade and the role of TNC’s in development

Answer 2

agree with modernisation theory

advocate the free market

removal of barriers to trade

foreign income boosts development (starts take off)

trickle down effect spreads wealth

sweatshops may be unpleasant, but necessary for economic growth

Question 3

Dependency theory’s view of trade and the role of development

Answer 3

exploitation - cheap labour, low wages, poor working conditions

some jobs created, but few and low paid

prevents local industry developing

only produces goods for export - not benefitting the local population

wealth flows back to the west where TNC’s are based

environmental damage/ pollution

Question 4

how much was global trade worth in 2024

Answer 4

$33 trillion

Question 5

positive factors that trade brings

Answer 5

stimulation of local businesses and entrepreneurs

employment - more and better jobs

wealth via ‘trickle down’

increased demand for new goods & ways of living

regarded as many as the key to development

competition for labour increases pay and improves conditions

Question 6

negative factors about trade

Answer 6

exploitation of people and countries - surplus value extracted

low wage jobs in low wage economies

extraction of natural resources by TNC’s

pollution and environmental damage

changes to cultural forms and traditions

Question 7

how does trade link to poverty

Answer 7

significant role in reducing poverty

in the last 30 years, poverty has declined sharply as trade has grown

Covid-19 pandemic halted progress in poverty reduction

Question 8

issues with employment - ageing populations and migration - ILO data for migration

Answer 8

people are living longer meaning people are often dependent and unable to work

population able to participate in the workforce is dropping - shortfall is partially resolved through employing migrant workers - however, this deprives LDC’s of workers - however this deprives LDC’s of workers who had been trained at their governments expense - so less able to provide services for their own populations

Question 9

Youth employment - ILO data

Answer 9

15-24 year olds are vulnerable to unemployment, despite improvements in educational provision in many areas of the world

they fail to gain workplace skills and work ceases to be an expectation for them

negatively impacts the training and skills base of the population

Question 10

Gender - ILO data for women

Answer 10

women are less well paid than men during discrimination causing a social shift where employers employ more women to maintain lower wage bills

industries that were mostly impacted by global crisis mainly employed men

causing women to become the breadwinner

Question 11

Sweatshop economies - War on Want

Answer 11

caused by increasing demand

workers in bangledesh making clothes for primark earn less than £20 a month doing long hours for low pay - living wage £45

health and safety regulations often ignored

Question 12

what does the Oxfam report identify that is happening to wealth inequality on a global scale

Answer 12

Top 1% own 43% of all global assets

this is through increasingly monopolistic corporations and they shape global political decision-making rules to enrich themselves

Question 13

Transnational corporations

Answer 13

businesses that operate across international borders, though most of them have their headquaters in the USA, Europe and Japan

Question 14

why does a company become multinational

Answer 14

to make more money

to have geographical flexibility - shift resources and operations to any location in the world

seek competitive advantage and maximisation of profits by constantly searching for the cheapest and most effecient production locations across the world

Question 15

what are some common features of TNC’s

Answer 15

concerned with the exploitation of mineral resources, specifically oil reserves and petrolium products

operate in a number of countries

tend to be located in non-unionised countries where women make up a large part of the workforce

target former communist countries, TNC goods have become more than just products, but symbolic of social change among the new and wealthy

Question 16

Pro’s for TNCs operating in developing countries

Answer 16

cheaper labour
cheaper access to raw materials
lower tax burden
fewer regulations in LDC’s

Question 17

Cons for TNC’s operating in developing countries

Answer 17

risk of tariffs due to lack of free trade
risk of tax
decreased demand
lack of control
regulations that are brought in
fakes

Question 18

Pros for the developing countries with TNC’s operating inside them

Answer 18

more jobs
new technology
training/skills
infrastructure
connections to wide global economy

Question 19

Cons for the developing countries with TNC’s operating inside them

Answer 19

loss of culture - new cultural forms
exploitation of workers - e.g. low pay
neocolonialism - power/control/ economic dominance
environmental problems

Question 20

the problems with monopoly capitalism

Answer 20

just one pharmaceutical company holds approximately 90% of the epipen market in the US

they contribute to wage inequalities, as they want to keep their costs low and workers have few alternatives

corporate monopolies can be a barrier to solving environmental problems

Question 21

Feminism and TNC’s - ‘exploitation thesis’

Answer 21

women receive low levels of pay

female work forces are controlled by a patriarchal system of intimidation and bullying

dual burden and triple shift - concepts still apply in the developing world

TNC’s have added to womens burden in developing countries

Maria Mies - women continue to be exploited by TNCs, due to their low status and limited alternatives

women are the most likely to work in EPZ’s

Question 22

EPZ’s - Export Processing Zones

Answer 22

parts of a country that are exempt from local laws and taxes

foreign firms are invited to set up business in the EPZ to produce goods for export

generous terms are offered to the TNC’s - e.g. buildings paid for by the country, firms being exempt from taxes

Question 23

features of EPZ’s

Answer 23

advanced communication facilities and enhanced infrastructure

typically located close to air or sea ports

Question 24

disadvantages of EPZ’s

Answer 24

manufacturing employment is skewed mainly towards the female population, which leaves the problem of unemployment for the male population unresolved

labour laws often neglected

some employees may work long hours in extreme conditions, such as extreme heat

trade unions and labour movements not allowed, so employees usually have to accept poorer conditions

due to the development and infrastructure EPZ’s bring, governments will often not help with conditions

Question 25

how is free trade imposed on poor countries through

Answer 25

agreements between two or more countries

conditions and ‘economic advice’ given to poor countries in return for loans from the International Monetary Fund (IMF) and the World Bank

agreements at the world trade organisation

Question 26

World Trade Organisation

Answer 26

aimed to promote international trade and the removal of trade barriers

Question 27

International Monetary Fund

Answer 27

aims to promote international trade and lend money to countries’ central banks when the country can no longer afford to ‘function’ as a business867

Question 28

The World Bank

Answer 28

designed to aid long-term development providing economic aid (loans) to member countries

supports a variety of investments - e.g. infrastructure projects