Globalisation MCQ 3

Questions and Answers

What is one of the positive effects of FDI in terms of employment?

Over 245,000 employees working indirectly for IDA Ireland (correct)

Over 100,000 employees working directly for IDA Ireland

Over 500,000 employees working directly for MNCs

No significant impact on employment

Which of the following is a type of tax revenue generated by FDI?

Sales tax

Labour tax (correct)

Customs duty

Property tax

What is the economic impact of goods produced by MNCs being exported?

Decrease in national income

No impact on national income

Increase in national income (correct)

Leakage from the circular flow of income

How does FDI contribute to economic growth?

Through increasing investment, exporting and job creation Signup and view all the answers

What is an example of balanced regional development due to FDI?

Pharmaceutical firm Allergan employs over 1,300 workers in Westport, Co. Mayo Signup and view all the answers

What would be the consequence if a multinational company like Apple were to shut down its operations in Ireland?

A large number of people would lose their jobs. Signup and view all the answers

What is a potential drawback of Ireland's low corporation tax?

It damages Ireland's international reputation. Signup and view all the answers

What would be the impact on the Irish government's revenue if there were a fall in profits or a decrease in the number of multinational companies in Ireland?

There would be a significant fall in government revenue. Signup and view all the answers

Which country has been critical of Ireland's low corporation tax?

The US Signup and view all the answers

What is a risk of relying heavily on foreign direct investment?

Economic instability due to dependence on external factors. Signup and view all the answers

Study Notes

Positive Effects of FDI

Employment opportunities arise in the host country, with over 245,000 employees working indirectly for IDA Ireland.
The influx of foreign capital generates significant tax revenue, including labour tax and corporation tax.
Multinational corporations (MNCs) export a substantial portion of goods produced, injecting foreign exchange into the economy.
Foreign Direct Investment (FDI) contributes to economic growth by stimulating investment, exporting, and job creation, which in turn increases national income.
FDI promotes balanced regional development, as observed in the case of Allergan, a pharmaceutical firm that employs over 1,300 workers in Westport, Co. Mayo.

Negative Effects of FDI

Over-reliance on FDI for employment can lead to significant job losses, as seen in the example of Apple's Irish operations, where 6,000 people would lose their jobs if it were to shut down.
Dependence on FDI for tax revenue poses a risk to government income, as a decline in profits or a reduction in the number of MNCs in Ireland would result in a substantial fall in government revenue.

Impact on International Reputation

Ireland's low corporation tax rate has sparked accusations that it is a tax haven, attracting scrutiny from authorities, particularly in the US, who aim to lure American MNCs back to the US.

Description

This quiz covers the benefits of Foreign Direct Investment, including employment, tax revenue, exports, economic growth, and regional development. Learn about the advantages of FDI for national income and job creation.