3.4 Impact of globalisation on local and national economies

• What are MNCS

  Multinational cooperation's are those with assets in multiple foreign countries
• How would investing foreign countries help the people of that country

  it would create jobs for these people, which could potentially improve their quality of life
• Why would MNCS choose to shift their production processes abroad

  to take advantage of the low cost of labour
• How would local firms benefit from MNCs in that area

  local firms may supply the MNC with raw materials or other goods, thus increasing their revenue
• Describe CSR (Corporate social responsibility)

  when firms ensure that their actions are beneficial to society
• How could the presence of an MNC hinder the growth of local firms

  if local firms can't benefit from economies of scale and provide their goods at the same price level as the MNC, they may lose out on revenue which will affect their profit
• How would the local economy benefit from MNC's

  MNC's would increase employment in the area, and through the multiplier effect this would increase spending and lead to stronger economic growth
• Would an increase in exports improve or damage the balance of payments

  this would improve the balance of payments
• Define stakeholders

  anyone with an interest in how a particular business is run
• What do cheap products imply about the workers making those products

  workers are paid very poorly
• Why would some countries fear trying to control MNC's

  if they impose too much regulation and red tape, the MNC may cease activities in that country, which can lead to unemployment and less economic growth
• Why would a firm monitor its own behaviour

  it may have high ethical standards
• What are the OECD guidelines for MNC's

  they encourage firms to adhere to the principles of human rights
• How might self regulation harm a firms profit

  they may lose out in a competitive market, thus reducing the profit potential of a firm