Benefits that MNCs bring to overseas countries HARRIET BENNETT

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  • Employment
    • Benefits that MNCs bring to overseas countries
      • Wages
        • Cheaper labour is important but some MNCs pay higher than average wages in host country.
        • They pay higher than average wages to increase motivation, increase productivity, lower staff turnover and wider choice of workers
      • Skills & technology transfer
        • MNCs may require skilled workers & train up local workers.
        • They may acquire useful skills that will benefit them if they change jobs.
        • Locals trained as managers may learn new business techniques.
        • MNCs bring new technologies which can be learnt & adopted in the host country
        • New work practices help the host country to become more competitive and grow (Technology transfer)
      • Effects on the wider economy
        • Increased employment & wages should enlarge the tax base & increase government revenue.
        • If benefits were paid to the unemployed, this bill may decrease.
        • Profits of the MNC can be taxed,
        • Increased government expenditure can benefit the wider population & the economy
        • Exports may increase, improving the balance of payments.
      • Corporate social responsibility
        • All companies will claim to have CSR policies.
        • This may be centred on the workforce, the local community or the local environment.
        • It may include better pay and conditions, improvementsto infrastructure, use of sustainable resources & environment protection
        • Those companies that take CSR seriously can greatly benefit the communities they operate in.
    • Initial investment in host country creates employment.
    • Workforce needed.
    • Local businesses may be involved in supplying or servicing the MNC & see an increase in business, taking on more workers.
    • The local people who have found employment will spend their income with local businesses. Increasing demand and creating more jobs
      • There is a positive local multiplier effect

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