TNCs

• The growth of Transnational Corporations (TNCs) has contributed massively to economic globalisation. They are large companies that are located in more than one country, e.g. Apple. These companies work in countries all around the world, through foreign direct investment (FDI), increasing flows and connections. TNCs operate internationally, through the processes of outsourcing and offshoring, which allows TNCs to work within a global production network.
• Foreign Direct Investment is the process of a TNC setting up business and production in another country.
• Outsourcing is when TNCs use other companies for certain products or services.

  Offshoring is when the production process is moved to another country, often because it is cheaper to do so or because there are fewer regulations to follow.
• Today, there are an estimated 77,000 TNCs in the world, with more than 770,000 foreign affiliates.
• TNCs are companies that operates in at least 2 countries, base its headquarters in one or more and has business operations in many other ones.
• Due to the nature of TNCs, they have been historically known to create large impacts on flows of people and money globally, including:

  • large flows of economic migrants
  • wealth gaps between countries
  • deindustrialization
  • profit-pulling
• TNCs are a significant factor in creating unequal flows of labour as due to globalisation and the ability to freely move from place to place with little restrictions or barriers there has been a shift of labour from poorer countries to richer ones where TNCs are currently operating.

  This shift in labour is causing an unequal flow of labour

  globally as there is a loss of valuable workforce in poorer LICs.
• What is a Transnational Corporation (TNC)?

  Companies that operate in at least 2 countries, base their headquarters in one or more, and have business operations in many others.
• What are some impacts of TNCs on the global flow of labour?

  TNCs cause an unequal flow of labour globally, leading to a loss of valuable workforce in poorer countries and a shift of skilled individuals and trained professionals to richer countries, where TNCs operate.
• What are remittances, and how do they relate to TNCs?

  Remittances are the money sent by economic migrants back to their home countries. TNCs create employment opportunities for economic migrants, and the remittances sent back home can benefit the home countries.
• Where do TNCs typically base their headquarters, and where are most of their business operations carried out?

  TNCs typically base their headquarters in their home countries (typically HICs), and most of their business operations are spread through LICs or MECs due to lower labour costs.
• What are some negative impacts of the unequal flow of labour caused by TNCs?

  The negative impacts include:

  • a loss of valuable workforce in poorer countries
  • a shift of skilled individuals and trained professionals to richer countries
  • a limited quantity of labour in LICs
  • leading to future wealth gaps and GDP problems.
• How do TNCs contribute to the unequal flow of money globally?

  TNCs take money from LICs back to HICs, where they have their headquarters, and benefit from cheap labour in LICs, leading to large wealth gaps globally.
• What are some examples of TNCs causing unequal flows of labour and money at different scales and locations?

  TNCs like Apple use China and Taiwan as their main production factories, employing a large number of workers in these countries with low pay and few benefits, while employees in HICs are paid far more.

  For example, Apple employees in China have been reported to live off of $2 a day, whereas employees in America can be paid up to $60,000 a year.
• How do TNCs reinvest in countries, and what benefits can this bring?

  TNCs reinvest in countries by building better infrastructure, creating jobs, and improving facilities. This can benefit the population economically and lead to a closing gap in unequal flows of money.

  For example, Apple's $9.8bn plan in 2019 to invest in China.
• What is the brain drain, and how does it relate to TNCs?

  The brain drain refers to the emigration of highly skilled or educated individuals from their home countries to countries offering higher wages and better work, where TNCs are operating. This results in a loss of valuable workforce in the home countries.
• How do TNCs contribute to the widening gap of inequality globally?

  TNCs take advantage of cheap labour in LICs, reaping profits in HICs, and fail to adequately support the countries where they operate. This leads to a widening gap in wealth, lower living standards, and social problems in the countries where TNCs operate.
• What are some examples of TNCs causing economic and social problems in countries where they operate?

  TNCs like Apple cause problems such as lower living standards, poor hygiene, little medical help and facilities, and suicide in countries like China, where they are large producers. The money taken by TNCs is unproportionately shared, leading to economic and social problems.