3.4.1 The impact of multinational corporations (MNCs)
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28 Terms
What is an MNC
a firm with assets and operations in multiple countries
Why do MNCs have market power
they are large and operate globally
How do MNCs affect local employment
they create jobs for local workers
How do MNCs create jobs indirectly
demand for buildings
What ethical issues can arise from MNCs
poor wages and unsafe working conditions
Why are sweatshops controversial
jobs exist but workers may be exploited
Why do some argue sweatshops are not entirely unethical
incomes may be higher than rural alternatives
Who often benefits most from MNC profits
the home country
How can MNCs benefit local firms
local firms may supply or service MNCs
What is the local multiplier effect
higher incomes increase local spending and jobs
How can MNCs improve worker skills
training and exposure to new industries
Why might skill development be limited
workers may only do repetitive tasks
What is corporate social responsibility (CSR)
firms acting ethically beyond profit
How can CSR benefit communities
investment in welfare
How can MNCs harm local firms
local firms cannot compete on price or scale
How can MNCs damage the environment
pollution from mining or manufacturing
How do MNCs affect national economic growth
higher employment and spending increase GDP
How do MNCs affect tax revenue
governments receive more tax income
What is FDI
long-term investment by foreign firms
How can MNCs attract more FDI
other firms follow successful investors
How can MNCs affect the balance of payments
exports may increase
How do MNCs transfer technology
bring skills
Why is human capital important
it raises productivity and living standards
What is profit repatriation
profits sent back to the home country
Why can profit repatriation be harmful
host country gains little income
What is the race to the bottom
firms move to countries with lowest costs
Why might MNCs leave a country
wages and costs rise
What is a risk of MNC relocation
job losses and weaker local economies
Note 
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