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4.4.1 Impact of MNCs - Coggle Diagram

- - - - As a result, businesses in the area may benefit from an increases in trade, higher revenues and more profit
    - - This is most likely to happen if MNCs lure workers away from other businesses by offering better conditions or higher wages, or supply products that compete directly with those produced by local businesses
  - - - MNCs might invest some of hteir own money to help develop roads, electricity, water and gas supplies, schools and other public amenities
      - They might do this to help build trust with the community, but also a better infrastructure is likely to improve the quality of human capital in the area
      - Better roads and improved transport links would also benefit MNCs
    - - In the UK, businesses have to pay rates to local authorities
      - Similar payments are likely to be paid by MNCs when they operate in other countries
      - This money can be used by local gvernments to help spend funding in the area
    - - Some MNCs make an effort to build strong links with the local community
      - They might participate in local, cultural or sporting events
      - They may give locals access to the company's facilities
- - - - Generally, flows on FDI should result in higher levels of GDP for the host nation
      - The extra output and employment resulting from new FDI will increase economic and should help to rise the living standards for people in the host country
    - - The profits made by MNCs and taxed by the host nation
      - This increases tax revenue for the government
      - This money can be spent on improving government services, such a s healthcare, education, housing, and transport networks
    - - The flow of FDI creates new jobs in the host nation
      - This helps reduce unemployment and save money that would otherwise be paid out in benefits to the unemployed
      - Businesses in the host country may also get a boost when an MNC invests in a project ecause a range of local suppliers will be needed
    - - Some of the money received by the government from FDI might be used to reduce national debt
      - This has a positive impact on a country's finances
      - If a country can reduce its debt, it sends out a message to the rest of the world that it is more financially stable
      - As a result, interest payments might be reduced, and the country should find it easier to borrow in the future
  - - - The flow of FDI when a project is being established will improve the balance of payments because money will flow into the host nation's account
    - - This is because if any of the output from a new factory is sold abroad, there will be a further flow of money into the balance of payments account of the host nation
    - - This is because they often find it difficult to get established in global markets and FDI allows them to boost sales of goods overseas
    - - This is because there will be a flow of money out of the country
      - There will also be a negative impact if profits are repatriated to the MNC's base
        
        Repatriated profits represent a flow of money away from the host country
  - - - This may result in the transfer of technologies and knowledge to local businesses
    - - This will help to make domestic producers more competitive and generate sales both at home and abroad if the improvements are significant
  - - - This is because they will be free to buy some of the goods that they produce
    - - The products supplied by MNCs will add to the choice already available in the host country
    - - The arrival of MNCs is likely to increase competition in the host country
      - The products made by MNCs may be cheaper because they use modern and efficient production techniques
      - Since their costs will be lower, they can offer products at lower prices
      - This competitive pressure may also force domestic producers to lower their prices
    - - If MNCs use 'state-of-the-art' technologies, modern materials and more efficient practices, then the quality of the products might also be improved
    - - In general, it is possible that many people in the host nation will enjoy better living standards when MNCs set up operations
      - Initially, they may benefit from employment opportunities and enjoy higher incomes
      - They will have more choice and enjoy access to cheaper and better quality products