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Flashcards in GS&GG: TNCs Deck (11)
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1

Outline the positive socioeconomic impacts of TNCs on their country of origin:

  • Cheaper goods as produced at a lower cost = benefits consumers

  • HICs can specialise in financial services = higher value

  • Increased tax revenue due to profit repatriation

2

Outline the negative socioeconomic impacts of TNCs on their country of origin:

  • Deindustrialisation due to global shift of manufacturing > e.g. Detroit
  • Structural unemployment  

3

Outline the positive socioeconomic impacts of TNCs on their host country:

  • Generates job opportunities  - average wage 40% higher than those paid by local firms

  • Positive multiplier effect = local businesses supply TNC/ investment in infrastructure can encourage further FDI

  • Upskilling of workers

4

Outline the negative socioeconomic impacts of TNCs on their host country:

  • Poor working conditions/child labour
  • TNCs may exert political pressure/undermine the work of the UN e.g. through footloose nature allowing race to the bottom in terms of minimum wages
  • Economic leakages/repatriation of profits

5

In what ways to TNCs promote inequality and conflict?

  • Take advantage of tax breaks to ensure don’t contribute to the host country (and origin country) e.g. Apple and Ireland

  • TNCs often pay higher wages than local firms = local firms may close due to lack of workers

  • Increase rural urban migration = rural decline

  • Outsourcing = high unemployment in inner city areas of HICs e.g. Detroit

6

In what ways to TNCs promote economic growth?

  • Creation of employment opportunities

  • Positive multiplier effect (infrastructural improvements/local firms part of supply chain)

  • Upskilling

7

Give evidence of TNCs negative impacts on Detroit:

  • Increasing unemployment (24.8% unemployed in 2010) = decrease in tax income
  • Degradation of the built environment = derelict factories and decrease in public spending (40% of street lights don’t work) (23% of buildings abandoned in 2014)
  • Concentration of poverty in inner city due to white flight of urban middle class = suburban housing estates left empty/ closure of department stores etc.
  • Out migration of professionals left inner city public services struggling

8

Positive impacts of Apple on Foxconn City:

  • Pay higher wages than other local firms
  • Use local firms to complete production processes = outsource to local firms can create race to the bottom

9

Negative impacts of Apple on Foxconn City:

  • Poor labour practices (race to the bottom) = high suicide rate = 14 workers in 2010
  • Reliance on non-renewables/use of toxic chemicals

10

Positive impacts of Apple on Ireland:

  • 4000 direct jobs and 2500 indirect
  • Migration of highly skilled workforce = improved reputation as a host for tech firms

 

11

Negative impacts of Apple on Ireland:

  • Most highly skilled workers are forign nationals (60% are Irish but mainly on production line)
  • Corporate tax avoidance = both US and EU claimed tax avoidance.