9.2.4

Transnational Corporations (TNCs)

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TNC Locations

TNCS often have HQ offices in HICs and their manufacturing in LICs.

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Head Quarters

  • TNCs are usually set up in HICs because they are nice locations and are usually where their clients are located.
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Reducing production costs

  • TNCs want to make the most money possible per item they make. To do this they must reduce production costs.
  • People in HICs have the benefit of laws that protect their human rights.
    • e.g. minimum wages, limits on working hours, and legislation that guarantees workplace safety.
  • However, in many LICs, the government needs business there so much that they fail to enforce high working standards (even if the laws exist).
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Workers in LICs 1

  • TNCs can pay employees less if they have their factories in LICs and do not have to worry too much about workers’ rights or building regulations.
    • This greatly helps TNCs reduce their costs.
  • Some locations are warm and humid and workers work long hours in unpleasant conditions without enough breaks.
    • These factories are often called ‘sweatshops’.
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Workers in LICs 2

  • Although workers in LICs are paid less than they would be in an HIC, they can make a decent living because the cost of living is a lot cheaper in LICs.
  • This means that there are a lot of people who are willing to work.
  • Lots of people are unemployed, so any work is better than none.
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Raw materials

  • In HICs, raw materials are not easily accessible (e.g. oil, coal and gas are in limited supply in the UK).
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Impact on HICs

  • As more and more industries are moved to LICs, this can have a negative impact on some areas in HICs.
  • For example, when Hull lost its shipbuilding industry, the city became financially unstable.

Jump to other topics

1Paper 1 - Changing River Environnments

2Paper 1 - Changing Coastal Environments

3Paper 1 - Changing Ecosystems

4Paper 1 - Tectonic Hazards

5Paper 1 - Climate Change

6Paper 2 - Changing Populations

7Paper 2 - Changing Towns & Cities

8Paper 2 - Development

9Paper 2 - Changing Economies

10Paper 2 - Resource Provision

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