Agencies of development: TNCs

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  • Created by: hannah8
  • Created on: 02-05-14 15:59
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  • Agencies of Development: TNCs
    • Summary
      • Corporations that have globalised their operations
        • They produce and sell around the world
        • They use global supply chains
        • They employ people in many different countries
      • As a result of globalisation, there are more/larger TNCs than ever before
        • As economic globalisation progresses, they are just as important as the State
        • 2004/5: Of the 120 most important economic units in the world, 54 were nation-states, 66 were TNCs
          • Majority of countries therefore have smaller economies than the 66 largest TNCs
      • TNCs exist to make profit for their shareholders
        • It is not their aim to help a country develop
        • Most countries actively seek TNCs
          • These are EPZs
            • Countries setting up EPZs assume that the presence of TNCs will have benefits, even if initially its exploitation
    • Modernisation theory/Neo-liberal
      • TNCs are essential
        • Able to introduce modern values
          • Can kick-start an economy
      • Any hardships are comparable to what developed countries went through
        • Painful but necessary
    • Dependency theory
      • Presence of TNCs intensifies dependence
        • Prevents local industry from growing
        • Ensures the country stays poor
        • Power of TNCs weakens workers/strengthens capitalism
      • Trade unions are realising they need to cooperate and provide a voice for workers
    • Costs of TNCs
      • Exploitation of workers
        • Conditions/pay may be low
        • Sometimes employ children
        • Not allowing trade unions
        • Making overtime compulsory
      • Exploitation of the environment
        • Using up renewable sources
        • Damaging ecosystems
        • Creating pollution
      • Exploitation of markets
        • Mis-selling of goods
        • Dumping of goods
        • Selling harmful goods
      • Better jobs go to people from developed world
      • Profits unlikely to stay in developing country
      • TNCs have little loyalty to particular countries
        • Will move on if they find cheaper
    • Benefits of TNCs
      • Bring investment in terms of money, resources etc.
        • Creates jobs where locals cannot
      • Need trained workers- raises aspirations
      • Provides opportunities for women
      • Brings modern values (e.g. equality)
      • Need and will pay for infrastructures
      • Encourage international trade


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