Business Studies Unit 4 Topic 6
- Created by: Alissa_Zorina
- Created on: 18-06-17 17:08
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Topic 6: Multinational corporations (MNCs) - companies that operate in more than one country
Advantages of MNCs to hosts:
- Employment opportunities - providing jobs to locals
- Transfer of technologies - entry of MNCs to new countries bring new technology; provides new ways of production for local businesses to learn and train to gain appropriate skills
- Tax revenues - MNCs provide tax revenues to host countries which helps them boost their infrastructure
- Economic growth - MNCs promote FDI into host countries; leads to increased incomes which leads to overall growth of the economy
- International relations - MNCs make countries cooperate with each other for mutual benefits; reduces conflict around the world
Disadvantages of MNCs:
- Environmental damage - MNCs destroy environment as some governments are to weak to control them
- Exploitation of local workers - MNCs use local workers and pay them wages but making them work in poor conditions; sometimes even using child labour
- Tax Evasion - some MNCs avoid or pay less taxes by cheating the government
- Repatriation of Profits - MNCs mostly give all revenue to their home countries refusing to share with host countries which directly affect their development
- Exploitation of natural resources - MNCs put a lot of pressure on countries natural resources for future generations
Can MNCs be controlled?
- Power of Multinationals - they combine high market shares with high net worth and use this power to pressure government to change laws in their favour despite the negative effects
- Legal constraints - more often control is weak…
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