Globalisation MNCs A 2 Economics Aims and Objectives

Globalisation & MNCs A 2 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?

MNCs • Not only investing in developing countries. 60000 50000 Value of Inward Acquisitions of UK Companies 1986 Q 1 -2009 Q 3 40000 30000 20000 Value (£) 10000 19 86 19 Q 1 87 19 Q 3 89 19 Q 1 90 19 Q 3 92 19 Q 1 93 19 Q 3 95 19 Q 1 96 19 Q 3 98 19 Q 1 99 20 Q 3 01 20 Q 1 02 20 Q 3 04 20 Q 1 05 20 Q 3 07 20 Q 1 08 Q 3 0 Quarter

MNCs Impact on LDC will depend on… 1 2 3 4 • Willingness to meet the needs of the host economy – employment, training, environmental protection. • MNCs aware of costs involved, but also potential negative press. • Ability of host government to regulate activities effectively and not overlook human rights / health and safety to attract FDI. • 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. • 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