Advantages and Disadvantages of TNCs Sort the following statements into the following sets - Advantages of the presence of TNCs in a global market-place - Disadvantages of the presence of TNCs in a global market-place - Effects on country of origin - Effects on host country - Social factors - Environmental factors - Economic factors Use the statements to help you construct an answer to the following essay questions; “TNCs have had a positive impact on the level of development in both developed and developing countries. Discuss.” “TNCs have proved socially, economically and environmentally destructive in both developed and developing countries. Discuss.” Advantages of TNCs Disadvantages of TNCs Effects on country of origin Effects on host country Social factors Environmental factors Economic factors
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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.
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