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MNC & FDI, GLOBALIZATION - Coggle Diagram
MNC & FDI
REASONS
Economies of scale
Company grows bigger - lower cost
MNC are powerful - pressure on supplier
Acess to natural resources and cheap materials
More valuable & cheaper resources in another country
Acess to global customers
Sales in global market > domestic market
ADVANTAGES
More job opportunity
Overseas operation - local workers
Offer higher wages
Increase econ growth - raise living standard
Investment in infrastructure
Govt invest to attract investors
MNC invest for business interest
Developing skills and capitals
Govt invest in education to attract /FDI
MNC provide training & work experience for local labor
MNC - up-to-date technology
MNC encourage locals to invest in capital projects
Contribution to tax
MNC are taxed by host nation
DISADVANTAGES
Tax avoidance
MNC may avoid to pay tax in well- legal system
Less developed countries have little chance of getting a fair share
Enviromental damage
Pollution
Extraction industry - destructive e.g mining
Moving profit aboroad
Repatriation
Host country loses out
Benefits to developed > less-developed countries
GLOBALIZATION
Increased significance of multinationals
Reduced cost of communication
Reduced cost of transport
Fewer tariffs and quotas