How do MNCs create employment in host countries?

Effects on local labour, wages and working conditions, on local businesses and communities, and on the national economy through FDI flows, tax and technology transfer.

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How do MNCs affect local businesses and working conditions?

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How do MNCs affect the local environment, and what are FDI flows?

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How do MNC profits affect a host country's balance of payments?

Key term

If an MNC establishes a factory that exports most of its output, what is the likely effect on the host country's current account?

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How do MNCs influence business culture in host countries?

Questions from this subtopic

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1
How do MNCs create employment in host countries?
Model answer
By establishing operations that require local workers for production, administration, and support functions.
2
Why might MNCs pay higher wages than local firms?
Model answer
To attract skilled workers to their operations.
3
What dual effect can MNC wage policies have on local labour markets?
Model answer
They may raise local wage levels overall, but also create wage inequality between MNC employees and non-MNC employees.
4
Why do working conditions in MNC operations vary between different host countries?
Model answer
Some MNCs implement higher international standards, while others may exploit weaker local labour regulations to reduce costs.
5
How can MNCs negatively impact local businesses through competition?
Model answer
By using economies of scale and superior resources to undercut prices or attract customers away from smaller local firms.
6
In what way can MNCs positively impact local businesses?
Model answer
By creating supply chain opportunities where local firms become suppliers or distributors for the multinational.

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