Please enable JavaScript.
Coggle requires JavaScript to display documents.
4.5 Role of FDI and MNCs (why do some LEDCs (China/Brazil/Mexico) attract…
4.5 Role of FDI and MNCs
FDI
LT investment
creation of MNCs
why do MNCs invest in LEDCs?
70% of FDI flows into LEDCs and 88% flows out
extraction of natural resources
increase sales and decrease costs
labour costs lower in LEDCs
slacker regulations
why do some LEDCs (China/Brazil/Mexico) attract more MNCs?
secure legal framework
stable macroeconomic environment
stable political environment
high levels of human capital
proximity to a major growing market with high Y
low labour costs
quantity and quality
natural resources
infrastructure
do MNCs promote EG and EDevt?
disadvantages
tax contributions less due to concessions
remittances - income does not stay in country
capital intensive tech will not increase N+
buy intermediate pdts overseas
worsens Y distribution- rurals no access to jobs
synthesis
depends on support from govt and enforcement
MNC activities must complement to macrogoals
effects can only be seen in the LR
advantages
undertake projects for LEDC
increase investment inflow
generate employement
training and skill creation
diffusion of technology