Negative effects of MNCs on host countries
- Created by: Harriet
- Created on: 30-03-15 15:29
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- Negative impacts of MNCs on overseas countries.
- Employment
- Wages can be low and working conditions poor. Sweatshops are sometimes found.
- Health and Safety conditions are often poor and regulations may be ignored.
- Child labour may be used and exploited.
- Skills & technology transfer
- MNCs may not train local workers to a high level.
- Skills may be brought in by hiring expat workers; locals may only get the unskilled jobs.
- Managers are often not recruited locally.
- R&D facilities may be kept in the home country, reducing opportunitiesto develop skills or technology transfer.
- Many MNCs enter another country simply to access a new market, so only sales & marketing facilities are estsablished.
- Effects on the local community
- Local businesses suffer at the hands of the MNCs that reduce their market share.
- They mass-produce standardised products, threatening national product variety.
- They act as agents for cultural imperialism, which replaces & even destroys that native culture with unwanted products & values.
- MNCs cause great damage to the environment by their processes & the transportationof their products. This damage can be short or long term & the resulting situation may be unsustainable
- Effects on the wider economy
- Profits can be repatriated to the home country
- Taxation can be reduced or avoided by transfer pricing
- MNCs are likely to take whatever incentives are on offer, stay for a while & then move to the newest low cost location in another country, leaving behind unemployed workers and a weakened economy
- They encourage a so-called 'race to the bottom'
- Employment
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