Increasing development- Trade and TNCs

• Trade between an LIDC and other countries can help the LIDC to develop by:

  • creating jobs and bringing money into the country
  • increases amount of money a country has to spend on development
• Problems with countries relying on trade to help them develop:

  • some LIDCs can't afford the technology to produce goods quickly and cheaply
  • conflict can make the supply of goods unreliable
  • trade can have a negative effect on people
  • LIDCs can export primary goods but don't create much profit
  • countries often depend on trading one product
  • if a product demand falls, the country's income decreases sharply
• Trans-national companies (TNCS):

  • TNCs are companies that are located in or produce and sell products in more than one country
  • TNC factories are usually located in poorer countries because labour is cheaper and there are fewer environmental regulations which makes them more profit
  • They improve development by transferring jobs, skills and money to less developed countries
  • TNC offices are usually located in richer countries because there are more people with administrative skills
• Advantages of trans-national companies (TNCs):

  • they create jobs
  • employees in poorer countries get a more reliable income
  • they spend money to improve local infrastructure
  • new technology is brought to the poorer countries
• Disadvantages of trans-national companies (TNCs):

  • employees in poorer countries may be paid lower wages than employees in richer countries
  • they may have to work long hours in poor conditions
  • profits aren't reinvested in poorer countries the TNC operates in
  • jobs created in poorer country's aren't secure