4.4 – Global Industries and Companies (Multnatonal Corporatonss
4.4.1 – The Impact of MNCs
Multinatioinal A busiiness that ioperates iin miore thain ioine ciouintry
ciorpioratioins (MNC)
FDI fliows A reciord iof the value, expressed iin US$, iof direct iinvestmeints
made betweein ciouintries iin a givein periiod iof tme
Balaince iof paymeints A reciord iof a ciouintry’s trade iin gioiods aind services, iinvestmeint
iinciome aind trainsfers with the rest iof the wiorld
Busiiness culture The values aind staindards shared by peiople aind grioups withiin ain
iorgainisatioin
Tax reveinue A finaincial charge by the Gioverinmeint ioin ain iindividual ior
busiiness
Trainsfer priciing Whein ioine part iof ain MNC iin ioine ciouintry trainsfers (sells) gioiods/
services tio ainiother part iof the MNC iin a difereint ciouintry. The
price charged iin the ‘trainsfer price’
Characteristcs iof MNCs:
Cioinsiderable market piower
Ciomplex structures – multisite aind multiprioduct
Orgainic aind iiniorgainic griowth
Heavy R&D iinvestmeint
Gliobally recioginised brainds
Impact ioin Liocal Labiour, Wages, Wiorkiing Cioinditioins aind Jiob Creatioin
Create jiobs with beter May explioit liocal wiorkers
ioppiortuinites Creates wage iinflatioin aind may
Higher wages meain imprioved liviing cause reseintmeint iin thiose beiing
staindards paid less fior the same jiob
Traiiniing meains miore emplioyable Atract the taleinted, leaviing less
aind efcieint wiorkfiorce skilled wiorkers fior liocal busiinesses
Beter wiorkiing cioinditioins as they Wiorkiing cioinditioins may be pioior
have a reputatioin tio maiintaiin despite piolicies stating iotherwise
Impact ioin Liocal Busiinesses
Priovide suppiort services e.g. Drive up wage ciosts fior liocal frms
builders, cleainers, supply iof raw ciompeting fior wiorkers
materials/ciompioineints, etc. May beciome less ciompettve if
Imprioved iinfrastructure MNC have miore faviourable terms
Miore liocal frms expaind, meainiing Liocal busiinesses may liose
multplier efect sales/reveinue tio MNCs
Impact ioin Natioinal Ecioiniomy
FDI:
Ecioiniomic griowth
Iincreased ciompettveiness
Iincreased tax reveinue
Jiob creatioin aind related kiniowledge/skills
4.4.1 – The Impact of MNCs
Multinatioinal A busiiness that ioperates iin miore thain ioine ciouintry
ciorpioratioins (MNC)
FDI fliows A reciord iof the value, expressed iin US$, iof direct iinvestmeints
made betweein ciouintries iin a givein periiod iof tme
Balaince iof paymeints A reciord iof a ciouintry’s trade iin gioiods aind services, iinvestmeint
iinciome aind trainsfers with the rest iof the wiorld
Busiiness culture The values aind staindards shared by peiople aind grioups withiin ain
iorgainisatioin
Tax reveinue A finaincial charge by the Gioverinmeint ioin ain iindividual ior
busiiness
Trainsfer priciing Whein ioine part iof ain MNC iin ioine ciouintry trainsfers (sells) gioiods/
services tio ainiother part iof the MNC iin a difereint ciouintry. The
price charged iin the ‘trainsfer price’
Characteristcs iof MNCs:
Cioinsiderable market piower
Ciomplex structures – multisite aind multiprioduct
Orgainic aind iiniorgainic griowth
Heavy R&D iinvestmeint
Gliobally recioginised brainds
Impact ioin Liocal Labiour, Wages, Wiorkiing Cioinditioins aind Jiob Creatioin
Create jiobs with beter May explioit liocal wiorkers
ioppiortuinites Creates wage iinflatioin aind may
Higher wages meain imprioved liviing cause reseintmeint iin thiose beiing
staindards paid less fior the same jiob
Traiiniing meains miore emplioyable Atract the taleinted, leaviing less
aind efcieint wiorkfiorce skilled wiorkers fior liocal busiinesses
Beter wiorkiing cioinditioins as they Wiorkiing cioinditioins may be pioior
have a reputatioin tio maiintaiin despite piolicies stating iotherwise
Impact ioin Liocal Busiinesses
Priovide suppiort services e.g. Drive up wage ciosts fior liocal frms
builders, cleainers, supply iof raw ciompeting fior wiorkers
materials/ciompioineints, etc. May beciome less ciompettve if
Imprioved iinfrastructure MNC have miore faviourable terms
Miore liocal frms expaind, meainiing Liocal busiinesses may liose
multplier efect sales/reveinue tio MNCs
Impact ioin Natioinal Ecioiniomy
FDI:
Ecioiniomic griowth
Iincreased ciompettveiness
Iincreased tax reveinue
Jiob creatioin aind related kiniowledge/skills
