Unit 1, Section 6: Multinational Companies

Foreign Direct Investment (FDI)

This refers to cross-border investment in which a foreign company establishes an ongoing and significant stake (financial interest and degree of influence) in its operations in another economy.

host country

This is any nation that allows a multinational company to set up in its country.

Globalization

Refers to the process of greater integration and interdependence of businesses and economies throughout the world.

Gross Domestic Product (GDP)

GDP is a measure of the monetary value of a country's annual output or its national income. MNCs contribute to the host country's GDP.

multinational company

A business that operates in two or more countries or is legally registered in more than one country.

Protectionist policies

These are measures imposed by a country to reduce the competitiveness of imports, such as tariffs (import taxes), quotas, and restrictive trade practices.

Synergy

This is a key benefit of growth through multinational companies and occurs when the whole is greater than the sum of the individual parts. A larger MNC, with synergy, perhaps through a merger or acquisition of another business located overseas, creates greater levels of output, and improved operational efficiency.