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Increased Significance of MNC/FBI - Coggle Diagram
Increased Significance of MNC/FBI
Advantages
These advantages will mostly happen to the destination country of MNC
More job opportunities
MNCs are usually big, so they need a lot of labor in the country they develop their company in.
This will bring more job opportunities to the people in the destination country.
Developing skills and capitals
Skills
Since MNCs usually come from developed country to developing countries, they are usually more developed in terms of skills
They provide training and workers in the destination country, and the labor there may become more skilled.
To attract MNCs, the destination country's government can also increase the skills of labour in their country.
Capitals
Arrivals of MNC can boost the stock of capital in the destination country.
MNC has advanced technologies. When they install it at the destination country, they will automatically have more advanced technologies too.
The government can support and encourage local suppliers to supply for the coming MNCs, and this will increase capital stock.
Contributing to tax
MNCs hosted in the destination country needs to pay tax for the running of the business, and the business' wealth
This will contribute to the tax revenue of the government in the destination country.
More investment in infrastructure
To attract more MNCs, the government in the destination country will invest more infrastructure.
If an MNC is developing in the destination country, their contribution to tax will also help the government to invest in infrastructure. They can use the tax revenue to build roads, etc.
Disadvantages
Tax Avoidance
The larger an MNC, the larger tax they have to pay.
Some powerful MNCs can avoid tax to gain more profit to themselves, and this reduces the tax revenue in the destination country.
Environmental Damage
MNC needs large resources
Sometimes, the way they take resources in the destination country can harm the environment
Extra mining activities could increase environmental damage.
Moving profit abroad
One of the ways some MNCs can avoid tax in the destination country is by repatriation. They move the profit they make in the destination country back to the base country.
This will disadvantage us, because we will have less tax revenue.
Reasons for the rising of MNC
Economies of scale
easy access too natural resources/cheap materials
Access to global customers