TNCs and FDI
How much of Research and Development funding in the UK is provided by the top 100 TNCs?
1/3
What percentage of the UK workforce is employed by TNCs?
12%
What is the corporation tax rate in Ireland?
12.5%
How many new jobs were created in the UK due to TNCs from 2010 - 2014?
220,000
By how much has FDI declined in developing countries since 2004?
27%
How much of the UKs GDP is accounted for by TNCs?
30%
What is the corporation tax rate in the UK?
30%
How many of the 500 top firms in the UK are TNCs?
312
In the 1980s what percentage of multinational production was based in 5 countries?
50%
What percentage of FDI inflows are received by developing economies?
50%
What is a TNC?
A firm owning a foreign affiliate and operating in more than one country
What are the major TNCs in Britain? (5)
Cadbury, BP, Kellogg, Unilever and Ford
When firms become a TNC to secure resources, get cheap labour or overcome transport costs associated with exporting what is the named reason?
Cost orientated rationale
What has made the UK more dependent on TNCs for manufacturing and RandD?
Deindustrialisation
How are there employment gains in the UK from TNCs?
Directly and Indirectly through supply chain links
Why is it good to attract FDI
Firms will employ, invest and strengthen existing supply chains in their host countries
What has caused MNC manufacuring to move to developing countries?
Globalisation, trade liberalisation and de-skilled production
How might TNCs not benefit employment in the UK?
If they keep managerial positions in their home country or bring over employees from their home country to save training costs
When firms become a TNC to secure markets what is the named reason?
Market orientated rationale
How does FDI differ from portfolio investment
Portfolio investment is usually done by the purchase of shares and firms do not obtain any ownership or controlling interest
What is FDI
Purchase by firms of productive assets in foreign countries
What is the name for the group of countries in Asia with a similar GDP per capita to Europe?
The Four Tigers
What is the Trojan Horse effect? (G&W)
The idea that in a TNC entering the UK economy, investment, profits and markets are diverted away from local firms to the TNC
How do TNCs benefit local firms?
They strengthen existing supply chains allowing existing firms to follow
What happened to the UK car industry after Nissan opened a plant there?
Through higher standards, the competitiveness of the UK car industry strengthened
How do TNCs avoid paying tax?
Through transfer pricing
Name some of the biggest TNCs
Toyota, BP, Kellogg, Shell and Vodafone
How has FDI positively impacted the UKs economic structure?
by chanelling funds into high tech etc. the UK has gained a comparative advantage
How is UK policy structured to entice TNCs?
flexible labour market, low corporation tax and poor controls on company ownership
How do you measure the Transnationality Index?
foreign assets / total assets
Why has Globalisation taken place?
improved communication, organisational technologies and similar trends
What happened to the productivity in UK foreign owned firms after their takeover?
it became much higher
What is the Transnationality Index?
the indicator of the global activity of a company's operations
Why do firms become a TNC?
to secure resources and markets or to overcome transport costs associated with exporting and get cheap labour
Why is it good to have markets in other countries?
to sell more and extend the product lifecycle
