MNCs



A multinational(MNC) or transnational (TNCs) company operates in two or more countries across national boundaries and are a major force for globalisation. The turnover of large TNCs exceeds the GDP of small countries. This means the impact of a TNC can be significant. MNCs locate in many different countries for different reasons. These include:
 * Government Incentives such as subsidies
 * Access to cheap labour and/or resources
 * Access to consumers (you don't have tariffs placed on your goods)
 * Lower transportation costs
 * Less legal restrictions such as relaxed health and safety laws
 * benefits from economies of scale.



__The Benefits to a country of MNCs __
 * Introduces new finance in a country. This may be useful if the country is poor and lacks savings to finance investment.
 *  Output and job creation-remember jobs created in suppliers/support services etc.
 *  TNCs bring employment and training in modern management & production techniques. Wages may be high by local standards.
 *  Foreign Direct Investment (FDI) introduces new technologies, that eventually transfer to local firms through labour turnover
 *  Improves local infrastructure e.g. road, telecommunications - positive externalities
 * Increased tax revenue
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Consumers benefit from more choice and cheaper prices. Competition from MNC can drive down all firms' prices.
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">MNCs and Globalisation as a whole increases cooperation between countries and therefore increases stability and peace.

__<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Problems for a country caused by MNCs __
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Domestic firms may be forced out of business.
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;"> MNC/TNCs are accused of importing inappropriate technology, which reduces not increases employment in a country.
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Conflict of stakeholder objectives: TNCs maximise profits, not workers needs.
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Environmental and safety record of TNCs is not good.
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;"> TNCs move funds to tax havens to reduce reported profits. NGOs estimate transnationals avoid paying an estimated $50Bn taxes per year. Lost tax revenues mean Countries are less able to fund services.( This is Six times the estimated annual costs of achieving universal primary education, and almost three times the cost of universal primary health coverage.)


 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;"> Profits may not be reinvested into the country but sent back to the already rich shareholders abroad. You may argue that Nike’s huge profits go to their rich US share holders at the expense of exploited workers in SE Asia

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">S **<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">tudent Tasks: **
 * 1) **<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Find some examples of the environmental Impact of MNCs .....(also P204 in your textbooks). Do some research on "Food Miles". What is the relationship between Globalisation and food miles? **
 * 2) **<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Read P197 in your textbooks. What is Foreign Direct Investment? What is a "Joint Venture"? **
 * 3) <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Research an example of FDI and describe the advantages and disadvantages of the FDI to all stakeholders (the firm, Government, consumers, workers etc). You will be required to make a short presentation on your example to the rest of the group.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;"> An example