Assess the extent to which Trans National Corporations (TNCs) have a positive impact on both developed and developing countries. (15 marks)

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Assess the extent to which TNC’s have a positive impact on both developed and developing countries.

(15 marks)

As we know the movement of globalization is very important in today’s way of life. It affects many different aspects, including culture, economy, and environment also some demographic, political and technological issues. It helps to promote connection, remove barriers and most of all encourage global movement.  Globalization creates a greater exchange of ideas, resulting in more knowledge gained about other cultures, also new trade opportunities, of products which were not available in the past. Trans National Corporations (TNC’s) are companies which operate in more than one country. The largest firms have branch plants in many different countries. An example of a TNC is McDonalds; it has nearly 30,000 restaurants in 119 countries. Trans National Corporations grow and develop by buying foreign firms, expansion (popularity) and by broadening their product range. As TNC’s operate worldwide they affect many different people in every stage of their function.

        The social side of the effects creates by the function of TNC’s is great, as the companies are making money, there are many other factors which are also affected. One of the main impacts TNC’s have on both developed (MEDC) and developing (LEDC) countries, is the exchange of ideas and knowledge from different countries. TNC’s have their headquarters of research and development in their country of origin, and many manufacture their products in developing countries (LEDC’s). This has created new possibilities to people in LEDC’s. Foreign Direct Investment (FDI) is basically defined as a company from one country making a physical investment into building a factory in another country. Foreign businesses in LEDC’s provide new jobs and skills for local people. E.g. UK 2007, FDI generated more than 700 projects, which created over 50,000 jobs, this has a significant effect on local communities. Jobs are created in the production of products for foreign businesses, especially with assembly industries (electrical goods & electronics) also clothing, sports goods and toys. TNC’s help with the transfer of technology, resulting in benefits in both the developed and developing country in the process, additionally, and barriers are broken between countries as trade is introduced, this helps with the flow of income and outcome of the separate countries as they each sell on the products which they specialize in. As a result of TNC’s requiring workers in developing countries, the multiplier affect is introduced, this is when an industry locates in an LEDC, which then provides jobs for the workers, resulting in the local people having more money to spend, this then develops more and more local shops and businesses to be set up, which means overall, services improve. Money created by this can be used on education, health and infrastructure on the developing country. The money can also be put toward improving the infrastructure of the town or country as a whole, roads, railways, and airport can be developed or introduced, which all result in easier, safer access to the country which will introduce more business and create more jobs. The cycle goes on, as the advancement of these, also require workers, this bestows new jobs for many unqualified workers, who have had poor education. The need of jobs also creates more opportunities for female employment in low skilled manufacturing jobs, additionally the reduction in racism and nationalism in people of different nations, as jobs draw people to move to different locations, people mix and become more aware and tolerant of each other’s lifestyles and customs. All of which provide an outcome of overall higher standard of living, due to the introduction of new local businesses, and use of improved infrastructure.

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        In developed countries the social side is also affected. Employment is also created as more businesses are introduced more and more workers are needed to make sure the TNC is successful.  Additionally as developing countries require the work and production to take place in developing countries where cheap labour is abundant, companies money is saved, as not huge amounts is being spent on wages for workers abroad. As already mentioned TNC’s are seen as the architects of globalization, helping to build bridges, this means that TNC’s are able, with the use of developing country work forces, to produce products that ...

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