Globalisation & MNCs A2 Economics

Aims and Objectives Aim: Understand the role MNCs play in globalisation Objectives: Define MNCs Examine the role MNCs play in globalisation Analyse the effects MNCs have on LDCs Evaluate the usefulness of globalisation

MNCs ‘an enterprise that controls and manages production establishments – plants – located in at least two countries. Provide Foreign Direct Investment in countries (investments in the domestic economy in new manufacturing plants by foreign MNCs.

Globalisation’s Offspring What are the major benefits of the growth of MNCs? What are the advantages of rapid globalisation to MNCs?

Value of Inward Acquisitions of UK Companies 1986Q1-2009Q3 MNCs Not only investing in developing countries. Value of Inward Acquisitions of UK Companies 1986Q1-2009Q3

MNCs Impact on LDC will depend on… 1 Willingness to meet the needs of the host economy – employment, training, environmental protection. MNCs aware of costs involved, but also potential negative press. 2 Ability of host government to regulate activities effectively and not overlook human rights / health and safety to attract FDI. 3 MNCs may expect abolition of trade laws, special tax rates, dispensations from labour laws like minimum wage. Some MNCs have been known to fiddle corporation tax in developing countries. 4 MNCs are extremely mobile and if economic climate in host country deteriorates, they will switch production and move elsewhere causing unemployment etc.

Globalised Countries

‘The Economics of Globalisation’ Globalisation booklet Spider diagram of argument for and arguments against globalisation. Bullet point effects on UK economy Bullet point effects on developing countries