Advantages and Disadvantages of TNCs · Advantages and Disadvantages of TNCs Sort the following statements into the following sets - Advantages of the presence of TNCs in a global

AdvantagesandDisadvantagesofTNCs

Sortthefollowingstatementsintothefollowingsets

- AdvantagesofthepresenceofTNCsinaglobalmarket-place- DisadvantagesofthepresenceofTNCsinaglobalmarket-place- Effectsoncountryoforigin- Effectsonhostcountry- Socialfactors- Environmentalfactors- Economicfactors

Usethestatementstohelpyouconstructananswertothefollowingessayquestions;

“TNCshavehadapositiveimpactonthelevelofdevelopmentinbothdevelopedanddevelopingcountries.Discuss.”“TNCshaveprovedsocially,economicallyandenvironmentallydestructiveinbothdevelopedanddevelopingcountries.Discuss.”

AdvantagesofTNCs

DisadvantagesofTNCs

Effectsoncountryoforigin

Effectsonhostcountry

SocialfactorsEnvironmental

factors

Economicfactors

TNCshelpdevelopmineralwealthincountriesthatmightnototherwisebeabletocapitaliseonlocalresources

PositivemultipliereffectusuallymeansthatthepresenceofTNCsinacountryimprovesroads,airportsandservices

OutsourcingmeansthatTNCsexploitcheaplabour.Asaresultlocalworkersarepaidbadly

Profitsdon’tgenerallyremainwithinthecountryinwhichgoodsaremanufactured

TNCsarefootlooseandmaymovetheiroperationsoutofacountryatanypoint–insearchoflowerwagesandcheaperproductionelsewhere.This

createseconomicuncertaintywithinthehostcountry

BecausetheyaretransnationalTNCscanavoidpayingfulltaxesinthecountrieswheretheyoperate.

Thisaffectstheservicesgovernmentsareabletoprovideforlocalpeople–inthiswayTNCsdolittletohelpLEDCsdevelop

TNCsareresponsibleforagrowingglobalwealthdividebychoosingtoinvestincertainregions(egsouth-

eastAsia)whilstlargelybypassingothers(particularlySub-SaharanAfrica).

TNCsareresponsibleformassiveenvironmentaldegradation–thebruntofwhichisoftenbornebythe

globalpoor.In1984UnionCarbide,anAmericanTNCaccidentlyleakedthepoisonousmethylgasintotheairinBhopal,Indiacausingthousandsofdeaths.

DangerousorenvironmentallydamagingproceduresaremovedtoLEDCswhichbecometheback-yard

dumpinggroundsofthewest.

TNCsinvestintheeconomiesofdevelopingcountriesandcanhelptoraiselivingstandards.

TNCsseemtobecentraltoeconomicgrowthintoday’sworld.ForeignDirectinvestmenthashelpedChina

overtaketheUKandFrancetobecometheworld’sfourthbiggesteconomy.

TNCscanberesponsibleforthetransferoftechnologyandmanagerialknow-howfromdevelopedtodevelopingnations.

TNCscanbeseenasthearchitectsofglobalisation.Theyhelpbuildimportantbridgesbetweennations.

TheproductsofTNCsareconsumedinalmosteverycountryonearth.Thiserodeslocaldiversityandhomogenisesourtastesandcultures.

TNCshavebroughtpoliticalstabilitytocountriesinEasternEuropeandtoChina.

TNCsarebecomingincreasinglyenvironmentallyaware.Becausetheyhaveaglobalcorporateimagetoupholdtheycan’tgetawaywiththesametypeofenvironmentalabuseof

thepast.MostTNCsarenowtryingtoflatuptheirgreencredentials.

TNCsofferconsumersalargedegreeofconsumerchoiceandcaninthiswayimprovestandardsofliving.

ThefootloosenatureofTNCsmeansthattheycanmovetheirbranch-plantstoareasoftheworldwhere

labourislessregulated.Forworkersthismeansthatunionsarebanned,healthandsafetyispoorandwageslow.

Over90%ofTNCshavetheirheadquartersinthedevelopedworld.Theprofitssimplygointothepocketsoftheirshareholders–rich,privilegedwesterners.

AlthoughitisclearthatMNCspaylesstoworkersinhostcountriesthantheywouldtoworkersintheircountryoforigin,theygenerally

paybetween10%and100%morethanlocallabourrates.

WhathappenstotheUKworkercompetingagainstcheaperwagesoverseas?Largeswathesof

industryhavebeenlosttooverseasmarkets.TherearenowlargepocketsofpovertythroughouttheUSandtheUK.

TNCsencouragecapitaltomoveinandoutofcountries–oftenveryquickly.TheAsianTigereconomyisagoodexampleofthis.Alotof

money/investmentwasmovedintotheAsianeconomyandthenjustasquicklymoneyleftthateconomy.Ifweallowcapitaltomovearoundtheworldwithoutregulationitbecomesrootless-itmovesintocreateaboomandmovesouttocreatearecession.

GoodsproducedbyTNCsarecheap.Butwemustthinkaboutclimatechangeandthecostofproductionto

theenvironment?Aregoodsreallythatcheap?Doesthepriceactuallyreflectthereal‘cost’ofaproduct?

TNCshavechangedourworkingpatternstowardsmoreshiftworkersandmoreshort-termcontracts.Asaresultofthisemployeesnolonger

formrelationshipswithoneanotherorwiththeircompany.Employeeshavejobsnotcareers.

TNCssimplyofferconsumersthebestdeal.Consumerswantthebestvalueandbigbusinessisthevehiclethatgivesittothem.TNCshaveallowedconsumersindevelopingcountriestobuyconsumergoods

thattheywouldneverhavebeenabletobuyinthepast.