WJEC (B) GCSE Geography

Theme 3 Topic 6

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Hodder Education Revision Lessons

Multinational companies

WJEC (B) Geography

Theme 3 Topic 6

Are multinational companies good or bad for poorer countries?

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Multinational companies

Which view is true?

They increase wealth and wellbeing within these countries.

They suck wealth out of these countries and reduce wellbeing.

or

WJEC (B) Geography

Theme 3 Topic 6

Negative effects

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Profit leakage. Why?

Low paid jobs. Why?

Pull out quickly. Why?

Poor safety record. Why?

Increases urbanisation.

Why?

Widens the poverty gap.

Why?

WJEC (B) Geography

Theme 3 Topic 6

• Profit leakage. Why? Profits from factories or hotels run by the MNC go to the country in which the head office of the company is found.

• Low paid jobs. Why?Mainly low paid jobs are provided for local people. Higher paid managerial jobs go to workers brought in from the head office country.

• Pull out quickly. Why? In times of recession/low sales, jobs of workers in the head office country are protected for longer than in other factories.

Negative effects

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WJEC (B) Geography

Theme 3 Topic 6

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• Poor safety record. Why? Poorer countries often have poorer safety standards, and governments are willing to turn a blind eye to breaking the standards that exist.

• Increases urbanisation. Why?

Most jobs created by MNCs are usually found in or close to urban areas. Hope of securing these jobs attracts more people from rural areas to cities.

• Widens poverty gap. Why?

Although wages are low in factories, they are higher than elsewhere. This increases the cost of living for all, as prices of goods rise.

Negative effects continued

WJEC (B) Geography

Theme 3 Topic 6

Positive effects

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Creates employment.

Why?

Increases skills base. Why?

Increased standard of living. Why?

Raises country’s profile. Why?

Improves balance of payments.

Why?

Improves infrastructure.

Why?

WJEC (B) Geography

Theme 3 Topic 6

• Creates employment. Why?

There are jobs available for local people, thus reducing numbers of unemployed and the resultant drain on local resources

• Increases skills base. Why?

Many MNCs operate training schemes for local people to learn how to use machinery. Such skills also attract other firms to the country

• Increased standard of living. Why?

An increase in earnings increases taxes paid within the country and gives more money to spend on services

Positive effects

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WJEC (B) Geography

Theme 3 Topic 6

• Raises country’s profile. Why?

MNCs plan their moves carefully. This is known worldwide and the movement into a particular country is a statement about its pro-business environment and political stability.

• Improves balance of payments. Why?

Many goods made by MNCs are exported to other nearby countries. This increases amount of money earned by the country.

• Improves infrastructure. Why?

MNCs often improve communication links within a country, e.g. road, rail and port facilities are updated and expanded. This benefits the country.

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Positive effects continued

WJEC (B) Geography

Theme 3 Topic 6

So, on balance, is the involvement of multinational companies a welcome change for a poorer country?

Discuss…

Multinational companies