Syllabus Content

By the end of the chapter, you should be able to understand:

• the impact of multinational companies on the host countries (AO3).

A multinational company (MNC) is a business organisation which has its headquarters in one country but has operations in a range of different countries.

Impact of MNCs on the host countries

Advantages of multinationals to host countries

• Economic growth and employment
• Skills, production techniques and improvements in the quality of the workforce
• Availability of quality goods and services in the host country
• Improvements in infrastructure.

Disadvantages of multinationals to host countries

• The effect on employment may be minor
• Some MNCs may be footloose. They locate MNCs according to the tax rates of each host country. If the host country now has lower tax incentives, the business may choose to leave and relocate. This provides no long term benefit for the country as it may impact the job opportunities of the local economy.
• There may be pollution and environmental damage. This is especially true of countries with little to no regulation in this regard.