Investment by TNCs

• Over time the worlds largest companies have grown in size to become transnational corporations(TNCs). They rely less on exporting their products and prefer instead to produce goods and services inside the borders of many different countries.
• Countries, organisations (e.g. the World Bank) and transnational corporations (TNCs) invest in low-income countries (LICs) to increase profits.
• Investments lead to improvements in:​

  • infrastructure (e.g. road networks and airports)​
  • services (water, sanitation and electricity)​
  • dams and reservoirs (for hydro-electric power)​
  • industrial developments ​
• advantages

  The companies bring much needed money into the country. Although most of their profits do return to the company’s country of origin, the local economy does benefit.
• advantages

  The companies help the development of the country by bringing in technology and knowledge that the host country does not possess.​
• advantages

  The new companies often help to improve transport links around the area.​
• advantages

  They create jobs for the local population.​
• advantages

  The new multi-national companies act as growth poles for other similar companies. They could encourage more companies to locate in that country once they see the benefits that it brings.​
• advantages

  Companies bring with them the technology and expertise to reduce harmful pollution and create a safe working environment.​
• disadvantages

  The wages paid to local workers are often low and some companies have been accused of exploiting the local workforce rather than benefiting it.​
• disadvantages

  Multi-national companies might be worried by sharing too much information, as they could find themselves with increased competition from local companies so might not develop technology.​
• disadvantages

  Often the jobs are highly skilled and so the company brings in their own people to dothem.​
• disadvantages

  Only a limited range of companies find that moving to a Developing World location is beneficial. They will only move there if it makes economic sense for their country.​