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World Sociology

Transnational corporations and world trade

  • 1 thing to know
  • A2 Unit 3

Overview

Transnational corporation, race to the bottom and transfer pricing.

What you need to know

Answer each one before you reveal it.

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Key term

How do agricultural subsidies in rich countries affect poor producers?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What is a transnational corporation?

    Model answer

    A transnational corporation is a firm that owns or controls production in more than one country and plans its operations across national borders.

  2. 2

    How can a corporation outweigh a national government?

    Model answer

    The largest corporations have revenues greater than the national income of many countries and can move investment elsewhere, which limits what a government dares to demand.

  3. 3

    What is meant by a race to the bottom?

    Model answer

    It is the competition between governments to attract investment by offering lower taxes, weaker regulation and cheaper labour than their rivals.

  4. 4

    What is transfer pricing?

    Model answer

    Transfer pricing is the practice of setting artificial prices for goods traded between a corporation's own subsidiaries so that profit appears in low-tax jurisdictions.

  5. 5

    How does subcontracting spread responsibility for working conditions?

    Model answer

    A brand buys from suppliers who subcontract again, so no company in the chain admits responsibility for the wages or safety of the people who actually make the product.

  6. 6

    What did the collapse of the Rana Plaza factory building in 2013 reveal?

    Model answer

    It killed more than a thousand garment workers producing for well-known brands and exposed how little those brands knew or controlled about the buildings their clothes came from.

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