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Questions and Answers
What is one positive effect of TNCs on the host country?
What is one positive effect of TNCs on the host country?
- TNCs can create a more skilled workforce through training (correct)
- TNCs often exploit cheap, non-unionised labor forces
- TNCs can undermine the government of the host country
- TNCs can cause a spiral of decline in the country of origin
What is a negative effect of TNCs on the country of origin?
What is a negative effect of TNCs on the country of origin?
- TNCs can promote the value of an ecosystem
- TNCs bring money back to their country of origin, which can be taxed or reinvested into the national economy
- TNCs can encourage a 'Race to the Top'
- People in the country of origin can face unemployment as jobs go overseas (correct)
What is a positive multiplier effect of TNCs on the local economy?
What is a positive multiplier effect of TNCs on the local economy?
- TNCs can cause a spiral of decline in the country of origin
- TNCs can shift environmentally damaging processes to other parts of the world
- TNCs can avoid tax commitments
- Investment by a TNC can trigger more employment through the process of cumulative causation (correct)
What is a negative effect of TNCs on local businesses and companies?
What is a negative effect of TNCs on local businesses and companies?
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What is an environmental negative effect of TNCs?
What is an environmental negative effect of TNCs?
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Study Notes
Effects of TNCs on Host Country and Country of Origin
- One positive effect of TNCs on the host country is the creation of employment opportunities, which can lead to an increase in household income and improvement in the standard of living.
Effects of TNCs on Country of Origin
- A negative effect of TNCs on the country of origin is the loss of skilled labor, also known as brain drain, as workers migrate to the host country for better job opportunities.
Multiplier Effect of TNCs on Local Economy
- A positive multiplier effect of TNCs on the local economy is the generation of additional economic activities, such as the creation of new industries, services, and businesses that cater to the needs of TNCs, leading to further economic growth and development.
Effects of TNCs on Local Businesses and Companies
- A negative effect of TNCs on local businesses and companies is the possibility of competition, which can lead to the closure of local businesses, especially if they are unable to compete with the economies of scale and technological advantages of TNCs.
Environmental Effects of TNCs
- An environmental negative effect of TNCs is the potential for environmental degradation, such as pollution, deforestation, and climate change, due to their operations, which can have long-term and far-reaching consequences for the host country's ecosystem.
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