Foreign Direct Investment & Outsourcing (HL IB Geography)

Export-generated income is higher

Reduction of negative trade balances

Wealth is spread with rise in labour-intensive manufacturing

Export-generated income is higher

Local areas benefit from growth in new, higher-paid jobs

Agricultural output is reduced as people are employed elsewhere

Rural-to-urban migration increases, placing pressure on core regions

Exploitation of workers by TNCs

A narrow economic base results in overdependence

Imports are cheaper

LIC growth increases demand for exports

Industrial processes are more efficient

Enhanced job prospects lead to increased worker mobility

Lack of jobs for unskilled workers, resulting in skills gap

Job losses are worse in areas of concentrated industries

Local branch factories are vulnerable to change

Employment: TNCs create job opportunities, which can help to create a positive multiplier effect

Environmental degradation: TNCs may exploit natural resources and cause pollution during the production process

Investment: TNCs use outsourcing or offshoring to maximise profits, bringing FDI into LIC and NIC countries

The exploitation of workers: sometimes workers are forced to work long hours for low pay in poor conditions

Trade: TNCs can increase trade between the countries they operate in due to the linkages they create

Closure of local businesses: local companies may be unable to compete with TNCs because of their economies of scale

Technology transfer: TNCs introduce new methods of production in countries, which can improve productivity and create further job opportunities

Increasing inequalities: the large profits generated by TNCs are not evenly distributed, with rich people getting much richer while poorer people see fewer benefits

Economic development: due to FDI and employment, LIC countries start to achieve more economic growth

Loss of culture: this is sometimes referred to as cultural erosion—the idea that cultural differences start to disappear as TNCs spread western cultural values and ideas

Education and technical skills: TNCs can invest in training, apprenticeships or scholarships to improve labour skills

Loss of taxes: profits are sent overseas, and taxes are not paid to the host country. TNCs are powerful and are not loyal to a host country's government; investment can disappear as quickly as it came

Development of energy resources: around 1.6 billion people in developing countries lack access to adequate energy services and rely on wood, dung and biomass for fuel. TNCs invest in small-scale and large-scale power generation projects such as dams and micro hydro power schemes

Exploitation of local resources: TNCs exploit natural resources, whether renewable, as in forests, fisheries and agricultural products, or non-renewable, such as minerals or petroleum, in developing countries