Advantages and Disadvantages of Tncs

Topics: Refugee, Money, Internally displaced person Pages: 3 (1260 words) Published: October 27, 2011
ransnational Corporation is a firm which owns or controls production facilities in more than one country through direct foreign investment. Despite TNCs growing most rapidly in the 1960s the foundations were laid in the inter-war period, notable examples being that of Ford, Phillips and Vauxhall. Around 90% of TNCs are based in MEDCs. I will discuss social, economic and environmental advantages and disadvantages of TNCs.

There is a number of benefits in which TNCs create economically, one of the most significant benefit is infrastructure development that is created due to the demands and requirements of the TNCs. This can include the building of roads, airports, improved power and water supply. An example of this is when Toyota set up manufacturing in the UK, within the Deeside area near Chester infrastructure was provided including new gas and water supplies which not only benefited the workers but existing residents of the area. Coca-Cola invested $1.5 million on infrastructure within the Russian economy. Another benefit of TNCs is that they provide financial support for the countries they operate in through the taxes they pay to the local government however the taxes they pay are often reduced to attract their investment in the first place. The presence of TNCs within a country also created inward investment in which money is pumped into the local economy without the expense of local tax payers money. For example the presence of Shell in Nigeria has indirectly employed 20,000 local people thus boosting the local economy to a great extent. Also it employs 5,000 people directly of which 95% are locals. Another significant benefit of TNCs is that exports are increased which help the balance of payments situation creating more buying power for the host country. This is shown through Toyota in the UK where the first of its cars in the UK were produced in 1992 and Toyota is now the UKs fourth largest exporter of fully built cars. Around 25% of its production is...
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