CH29:Business and the international economy

Multinational Business

Advantages to the country

Disadvantages to the country

Advantages to the business

New Markets

Obtain Raw Materials

Avoid Trade barriers

Low labour costs

Spread Risk

More Competition

Taxes paid to the government

Jobs Created

New investment

More exports

Fewer Imports

Existing firms in danger

Influence the government and economy

Profits flow out of country

USe of scarce resources

Often only unskilled jobs created

Exchange rates

Apprecitation - exchange rate rises

Price of one currency in terms of another

Depreciation - exchange rate falls

Supply of the currency

Demand for this currency

Export prices may have to rise

Imports prices likely to fall

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Imports prices likely to fall