Questions and Answers
What is one of the benefits of globalization to firms?
What is a consequence of global companies creating jobs?
What is an example of a global company's investment leading to economic growth?
How much corporation tax did the government make in 2019 from overseas firms?
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What is a benefit of global companies having the resources for research and development?
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What is a negative impact of multinational companies on the environment?
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Why might multinational companies manufacture products in low-wage economies?
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What happens to the profits made by multinational companies in a host country?
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How do some multinational companies minimize their tax liabilities?
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What can be a consequence of multinational companies leaving a host country?
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Study Notes
Positive Effects of Globalisation
- Global companies can benefit from economies of scale by accessing more markets, resulting in lower costs per unit.
- Job creation is a significant advantage of globalisation, with companies creating direct and indirect employment opportunities in both developed and less developed countries.
Economic Growth and Tax Revenue
- Injections by global companies can stimulate economic growth, such as Intel's €3.63bn investment in its operations in Kildare.
- The presence of overseas firms can generate significant tax revenue, with 1,500 companies located in Ireland contributing €10.9bn in corporation tax in 2019.
Research and Development
- Global companies with the resources for research and development (R&D) can drive innovation, leading to significant advances in areas like technology and pharmaceuticals.
Negative Effects of Globalisation
- Environmental damage occurs due to the over-exploitation of natural resources and pollution.
- Workers are exploited by global companies that manufacture products in low-wage economies with poor working conditions.
- Multinational corporations (MNCs) repatriate profits to their home country, resulting in a loss to the local economy where they are earned, for example, Apple.
- MNCs use tax loopholes to avoid or reduce their tax liabilities, resulting in a significant loss of revenue for the host country.
- These corporations have no loyalty to the host country and can leave at any time, leading to massive unemployment.
- Large firms abuse their power by paying very low prices to suppliers in the host country, such as cocoa or coffee farmers in Brazil.
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Description
This quiz covers the benefits of globalisation, including economies of scale, job creation, economic growth, and tax revenue.