GLOBALIZATION -Local suppliers might benefit by contracts with MNCs.
-Work migration due to greater freedom of movement.
FEATURES OF GLOBALIZATION -Workers in less developed countries often learn new
-Free trade of goods and services across international skills.
borders. -The government may spend more money on educating
-People are free to live and work in any country they and training labor to attract MNCs.
choose. -Offshoring is a disadvantage, where cheaper labor in
-Interdependence between nations. foreign countries displaces labor at home.
-Capital can flow between countries.
-Free exchange of technology and intellectual property. THE ENVIRONMENT:
-Pollution due to transportation and production.
REASONS FOR GLOBALIZATION
-Fewer tariffs, quotas and lesser degree of protectionism.
-Reduced cost of transport.
-Reduced cost of communication.
-Increased significance of multinationals.
-Many countries have simplified their monetary systems.
IMPACT OF GLOBALIZATION
INDIVIDUAL COUNTRIES:
-Countries that provide sites for global companies
generally benefit from increase in employment and
GDP, and an improvement in current balance.
-Economic events in one country can have an impact on
many other countries.
GOVERNMENTS:
-Profits maybe by global companies can be taxed by the
host nation.
-MNCs might result in more local businesses being set
up, helping government economic policy in the
provision of employment.
PRODUCERS:
-Access to huge markets, lower costs, access to labor
and reduced taxation.
CONSUMERS:
-If an MNC can produce goods more cheaply in foreign
factories, prices are likely to be lower.,
-Wider choice.
-Improved and cheaper transport communications have
opened up tourism.
WORKERS:
-New jobs are created in the countries where MNCs
open new factories.
Hamad Mohammed | 11D
, MULTINATIONAL COMPANIES -Developing skills.
-Developing capital and encouraging local suppliers to
(MNCs) AND FOREIGN DIRECT
invest in new capital projects to attract MNCs.
INVESTMENT -Contributing to taxes.
FEATURES OF MNCs DISADVANTAGES OF MNCs/FDI
-Huge assets (land, buildings etc.) and revenue. -Tax avoidance.
-Highly qualified and experienced executives. -Environmental damage.
-Powerful marketing and advertising. -Moving profits abroad due to repatriation, meaning the
-Highly advanced and up-to-date technology. host country loses out.
-Highly influential, both economically and politically.
-Vert efficient since they can exploit huge economies of
scale. INTERNATIONAL TRADE
FOREIGN DIRECT INVESTMENT (FDI) REASONS WHY COUNTRIES TRADE WITH
-FDI is when a company makes an investment in a
EACH OTHER
foreign country, such as a construction of a factory.
-Obtaining goods that cannot be produced domestically.
-Purchase of shares in a foreign business is another part
-Obtaining goods that can be bought more cheaply from
of FDI.
overseas.
-Selling off unwanted commodities.
REASONS FOR THE EMERGENCE OF
MNCs/FDI
ADVANTAGES OF FREE TRADE
ECONOMIES OF SCALE:
-Lower prices and increased choice of consumers.
-As companies get bigger and bigger, their costs get
-Lower input prices for a country’s industry. (inputs
lower and lower, hence the emergence of MNCs.
such as raw materials like iron, zinc or coal).
-Wider markets for a business and hence the reduced risk
ACCESS TO NATURAL REASOURCES/CHEAP
of business enterprise.
MATERIALS:
-MNCs are happy to invest overseas (FDI) in countries
DISADVANTAGES OF FREE TRADE
where there is cheap supply of resources/materials.
-Competition for domestic businesses.
-MNCs may also supply other countries with products
-Unemployment, as cheap foreign goods may displace
that are locally in shortage.
domestic industries.
-Unemployment and damage to the economy if demand
LOWER TRANSPORT AND COMMUNICATION
patterns change while a country is too dependent on a
COSTS:
narrow range of goods.
-Developments in the speed of transport and
-Dumping from foreign countries.
communication and their decrease in price have driven
the growth of MNC/FDI activity.
ACCESS TO CUSTOMERS IN DIFFERENT
REGIONS:
-MNCs have successfully developed because they can
sell far more goods in global markets than in domestic.
ADVANTAGES OF MNCs/FDI
-Job creation.
-Investment in infrastructure.
Hamad Mohammed | 11D
-Work migration due to greater freedom of movement.
FEATURES OF GLOBALIZATION -Workers in less developed countries often learn new
-Free trade of goods and services across international skills.
borders. -The government may spend more money on educating
-People are free to live and work in any country they and training labor to attract MNCs.
choose. -Offshoring is a disadvantage, where cheaper labor in
-Interdependence between nations. foreign countries displaces labor at home.
-Capital can flow between countries.
-Free exchange of technology and intellectual property. THE ENVIRONMENT:
-Pollution due to transportation and production.
REASONS FOR GLOBALIZATION
-Fewer tariffs, quotas and lesser degree of protectionism.
-Reduced cost of transport.
-Reduced cost of communication.
-Increased significance of multinationals.
-Many countries have simplified their monetary systems.
IMPACT OF GLOBALIZATION
INDIVIDUAL COUNTRIES:
-Countries that provide sites for global companies
generally benefit from increase in employment and
GDP, and an improvement in current balance.
-Economic events in one country can have an impact on
many other countries.
GOVERNMENTS:
-Profits maybe by global companies can be taxed by the
host nation.
-MNCs might result in more local businesses being set
up, helping government economic policy in the
provision of employment.
PRODUCERS:
-Access to huge markets, lower costs, access to labor
and reduced taxation.
CONSUMERS:
-If an MNC can produce goods more cheaply in foreign
factories, prices are likely to be lower.,
-Wider choice.
-Improved and cheaper transport communications have
opened up tourism.
WORKERS:
-New jobs are created in the countries where MNCs
open new factories.
Hamad Mohammed | 11D
, MULTINATIONAL COMPANIES -Developing skills.
-Developing capital and encouraging local suppliers to
(MNCs) AND FOREIGN DIRECT
invest in new capital projects to attract MNCs.
INVESTMENT -Contributing to taxes.
FEATURES OF MNCs DISADVANTAGES OF MNCs/FDI
-Huge assets (land, buildings etc.) and revenue. -Tax avoidance.
-Highly qualified and experienced executives. -Environmental damage.
-Powerful marketing and advertising. -Moving profits abroad due to repatriation, meaning the
-Highly advanced and up-to-date technology. host country loses out.
-Highly influential, both economically and politically.
-Vert efficient since they can exploit huge economies of
scale. INTERNATIONAL TRADE
FOREIGN DIRECT INVESTMENT (FDI) REASONS WHY COUNTRIES TRADE WITH
-FDI is when a company makes an investment in a
EACH OTHER
foreign country, such as a construction of a factory.
-Obtaining goods that cannot be produced domestically.
-Purchase of shares in a foreign business is another part
-Obtaining goods that can be bought more cheaply from
of FDI.
overseas.
-Selling off unwanted commodities.
REASONS FOR THE EMERGENCE OF
MNCs/FDI
ADVANTAGES OF FREE TRADE
ECONOMIES OF SCALE:
-Lower prices and increased choice of consumers.
-As companies get bigger and bigger, their costs get
-Lower input prices for a country’s industry. (inputs
lower and lower, hence the emergence of MNCs.
such as raw materials like iron, zinc or coal).
-Wider markets for a business and hence the reduced risk
ACCESS TO NATURAL REASOURCES/CHEAP
of business enterprise.
MATERIALS:
-MNCs are happy to invest overseas (FDI) in countries
DISADVANTAGES OF FREE TRADE
where there is cheap supply of resources/materials.
-Competition for domestic businesses.
-MNCs may also supply other countries with products
-Unemployment, as cheap foreign goods may displace
that are locally in shortage.
domestic industries.
-Unemployment and damage to the economy if demand
LOWER TRANSPORT AND COMMUNICATION
patterns change while a country is too dependent on a
COSTS:
narrow range of goods.
-Developments in the speed of transport and
-Dumping from foreign countries.
communication and their decrease in price have driven
the growth of MNC/FDI activity.
ACCESS TO CUSTOMERS IN DIFFERENT
REGIONS:
-MNCs have successfully developed because they can
sell far more goods in global markets than in domestic.
ADVANTAGES OF MNCs/FDI
-Job creation.
-Investment in infrastructure.
Hamad Mohammed | 11D
