World Trade and Transnational Corporations Flashcards
modernisation theory’s view of trade and the role of TNC’s in development
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
neoliberalism’s view of trade and the role of TNC’s in development
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
Dependency theory’s view of trade and the role of development
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
how much was global trade worth in 2024
$33 trillion
positive factors that trade brings
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
negative factors about trade
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
how does trade link to poverty
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
issues with employment - ageing populations and migration - ILO data for migration
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
Youth employment - ILO data
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
Gender - ILO data for women
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
Sweatshop economies - War on Want
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
what does the Oxfam report identify that is happening to wealth inequality on a global scale
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
Transnational corporations
businesses that operate across international borders, though most of them have their headquaters in the USA, Europe and Japan
why does a company become multinational
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
what are some common features of TNC’s
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
Pro’s for TNCs operating in developing countries
cheaper labour
cheaper access to raw materials
lower tax burden
fewer regulations in LDC’s
Cons for TNC’s operating in developing countries
risk of tariffs due to lack of free trade
risk of tax
decreased demand
lack of control
regulations that are brought in
fakes
Pros for the developing countries with TNC’s operating inside them
more jobs
new technology
training/skills
infrastructure
connections to wide global economy
Cons for the developing countries with TNC’s operating inside them
loss of culture - new cultural forms
exploitation of workers - e.g. low pay
neocolonialism - power/control/ economic dominance
environmental problems
the problems with monopoly capitalism
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
Feminism and TNC’s - ‘exploitation thesis’
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
EPZ’s - Export Processing Zones
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
features of EPZ’s
advanced communication facilities and enhanced infrastructure
typically located close to air or sea ports
disadvantages of EPZ’s
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
how is free trade imposed on poor countries through
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
World Trade Organisation
aimed to promote international trade and the removal of trade barriers
International Monetary Fund
aims to promote international trade and lend money to countries’ central banks when the country can no longer afford to ‘function’ as a business867
The World Bank
designed to aid long-term development providing economic aid (loans) to member countries
supports a variety of investments - e.g. infrastructure projects
