Advantages and Disadvantages of TNCs · Advantages and Disadvantages of TNCs Sort the following...
Transcript of Advantages and Disadvantages of TNCs · Advantages and Disadvantages of TNCs Sort the following...
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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
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TNCshelpdevelopmineralwealthincountriesthatmightnototherwisebeabletocapitaliseonlocalresources
PositivemultipliereffectusuallymeansthatthepresenceofTNCsinacountryimprovesroads,airportsandservices
OutsourcingmeansthatTNCsexploitcheaplabour.Asaresultlocalworkersarepaidbadly
Profitsdon’tgenerallyremainwithinthecountryinwhichgoodsaremanufactured
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TNCsarefootlooseandmaymovetheiroperationsoutofacountryatanypoint–insearchoflowerwagesandcheaperproductionelsewhere.This
createseconomicuncertaintywithinthehostcountry
BecausetheyaretransnationalTNCscanavoidpayingfulltaxesinthecountrieswheretheyoperate.
Thisaffectstheservicesgovernmentsareabletoprovideforlocalpeople–inthiswayTNCsdolittletohelpLEDCsdevelop
TNCsareresponsibleforagrowingglobalwealthdividebychoosingtoinvestincertainregions(egsouth-
eastAsia)whilstlargelybypassingothers(particularlySub-SaharanAfrica).
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TNCsareresponsibleformassiveenvironmentaldegradation–thebruntofwhichisoftenbornebythe
globalpoor.In1984UnionCarbide,anAmericanTNCaccidentlyleakedthepoisonousmethylgasintotheairinBhopal,Indiacausingthousandsofdeaths.
DangerousorenvironmentallydamagingproceduresaremovedtoLEDCswhichbecometheback-yard
dumpinggroundsofthewest.
TNCsinvestintheeconomiesofdevelopingcountriesandcanhelptoraiselivingstandards.
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TNCsseemtobecentraltoeconomicgrowthintoday’sworld.ForeignDirectinvestmenthashelpedChina
overtaketheUKandFrancetobecometheworld’sfourthbiggesteconomy.
TNCscanberesponsibleforthetransferoftechnologyandmanagerialknow-howfromdevelopedtodevelopingnations.
TNCscanbeseenasthearchitectsofglobalisation.Theyhelpbuildimportantbridgesbetweennations.
TheproductsofTNCsareconsumedinalmosteverycountryonearth.Thiserodeslocaldiversityandhomogenisesourtastesandcultures.
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TNCshavebroughtpoliticalstabilitytocountriesinEasternEuropeandtoChina.
TNCsarebecomingincreasinglyenvironmentallyaware.Becausetheyhaveaglobalcorporateimagetoupholdtheycan’tgetawaywiththesametypeofenvironmentalabuseof
thepast.MostTNCsarenowtryingtoflatuptheirgreencredentials.
TNCsofferconsumersalargedegreeofconsumerchoiceandcaninthiswayimprovestandardsofliving.
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ThefootloosenatureofTNCsmeansthattheycanmovetheirbranch-plantstoareasoftheworldwhere
labourislessregulated.Forworkersthismeansthatunionsarebanned,healthandsafetyispoorandwageslow.
Over90%ofTNCshavetheirheadquartersinthedevelopedworld.Theprofitssimplygointothepocketsoftheirshareholders–rich,privilegedwesterners.
AlthoughitisclearthatMNCspaylesstoworkersinhostcountriesthantheywouldtoworkersintheircountryoforigin,theygenerally
paybetween10%and100%morethanlocallabourrates.
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WhathappenstotheUKworkercompetingagainstcheaperwagesoverseas?Largeswathesof
industryhavebeenlosttooverseasmarkets.TherearenowlargepocketsofpovertythroughouttheUSandtheUK.
TNCsencouragecapitaltomoveinandoutofcountries–oftenveryquickly.TheAsianTigereconomyisagoodexampleofthis.Alotof
money/investmentwasmovedintotheAsianeconomyandthenjustasquicklymoneyleftthateconomy.Ifweallowcapitaltomovearoundtheworldwithoutregulationitbecomesrootless-itmovesintocreateaboomandmovesouttocreatearecession.
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GoodsproducedbyTNCsarecheap.Butwemustthinkaboutclimatechangeandthecostofproductionto
theenvironment?Aregoodsreallythatcheap?Doesthepriceactuallyreflectthereal‘cost’ofaproduct?
TNCshavechangedourworkingpatternstowardsmoreshiftworkersandmoreshort-termcontracts.Asaresultofthisemployeesnolonger
formrelationshipswithoneanotherorwiththeircompany.Employeeshavejobsnotcareers.
TNCssimplyofferconsumersthebestdeal.Consumerswantthebestvalueandbigbusinessisthevehiclethatgivesittothem.TNCshaveallowedconsumersindevelopingcountriestobuyconsumergoods
thattheywouldneverhavebeenabletobuyinthepast.