AO1 – Knowledge and understanding of the nature, role and impacts of a specified TNC. Knowledge and understanding of global systems and reasons for unequal flows of people and money.

AO2 – Application of knowledge and understanding to analyse and evaluate the extent to which a TNC contributes to unequal flows of money and people.

Notes for answers

The question requires links to be made between distinct elements of Global systems and international trade, specifically between the role of TNCs and unequal flows of money and people.

Allow credit for >1 TNC.

AO1

The concept of the global system and the flows of people and money within the system.
The causes of inequalities between and within countries as a result of globalisation. Unequal flows of people and money at different scales – global, regional and local.
Unequal flows of money lead to an increasing gap in wealth. Evidence suggests that this gap is decreasing between rich and poor countries but the gap within countries is widening as the wealthier residents are able to take more advantage of changes in education, technology and labour demands.
Workers are able to move more freely due to globalisation. However this movement is mainly from poor to richer countries. This creates an unequal flow of people.
Benefits of flows of people include the transfer of skills and new ideas. Labour shortages are addressed and it reduces unemployment in host countries. Negative include the ‘brain-drain’ as the most talented individuals are attracted by higherwages and improved working conditions. Outsourcing causes unemployment in original country.
Knowledge of the nature of TNCs and their contribution to a global system. TNCs are found across all sectors of industry and many are truly global in the sense that they produce global brands which are sold across the globe for example Coca-Cola.
TNCs are hierarchical and operate on a top-down basis from a HQ in a developed country. This means that branches are vulnerable to change as they are not part of the decision-making process for example there may be sudden factory closures or re-location resulting in sever job-losses.
Knowledge of the nature of a specific TNC. For example Nike based in Oregon, USA employs 44 000 people worldwide in the production of sportswear, equipment and services. It has a revenue in excess of $24billion. It has factories and offices located in 45 countries across the globe. Most of these are based in south and south-east Asia. Nike subcontracts or uses independently owned factories on a very much top-down based approach.
Changes in the TNC operations over time for example Nike began moving factories from the US to Asia in the 1970s to capitalise on potential Chinese labour force.

AO2

Evaluation of the social and economic impacts of a specific TNC on the host country. For example, outsourcing has created considerable employment in countries like Vietnam. However, there have also been concerns about child labour. Economically the success of Nike has attracted other TNCs to invest in Vietnam.
Evaluation of the social and economic impacts on country of origin. For example, the increased tax revenue for the USA and local taxes in Oregon. However, there is high local unemployment due to lack of manufacturing in the US.
Analysis of the role of TNCs in creating unequal flows of people. In the host country, there is increased rural-urban migration as farm workers seek out higher wages in TNC factories or call- centres. This creates a greater level of inequality between urban centres and rural areas. In the country of origin, there is a movement in of highly qualified individuals who are paid the highest wages for creativity in design and marketing. Conversely in inner city areas there is high unemployment due to the indirect loss of jobs through manufacturing plants moving to areas of lower wage costs.
Analysis of the role of TNCs in creating unequal flows of money. Majority of the profits are returned to the country of origin. Many TNCs take advantage of tax breaks and don’t contribute to the host country, for example the recent controversy in the UK over TNCs such as Starbucks. In the host country, contrary to popular beliefs TNCs often pay higher wages – average wage is 40% higher than that paid by local firms this can result in local firms having to close due to lack of workers. On the other hand, many TNCs use local firms to complete part of the production process increasing investment in the local area.
Analysis of other factors creating unequal flows of people. For example, evidence of forced labour found in Qatar where migrants building the World Cup stadiums have their documentation held and have few rights. The Qatari government is exploiting some of the poorest migrants from poor countries such as Nepal. Higher wages in richer countries encourage a ‘brain-drain’ from poorer countries. For example, the UK government actively encouraged the migration of Filipino nurses, leaving a lack of trained nurses in the Philippines.
Analysis of other factors creating unequal flows of money. These are varied and wide-ranging. Credit any factors which might be responsible. For example Colonialism, trade agreements, exploitation of resources.
Evaluation of the extent of the link between TNCs and unequal flows of money and people. TNCs can reduce inequality in flows of people by stemming flow of migrants for example Adidas operates many factories in Eastern Europe reducing the flow to western Europe.
Overall conclusion should seek to consider the extent to which TNCs are responsible in creating unequal flows of people and money. Any conclusion is valid as long as it is supported by evidence in the response.

Level 4 (16–20 marks)

Detailed evaluative conclusion that is rational and firmly based on knowledge and understanding which is applied to the context of the question (AO2).
Detailed, coherent and relevant analysis and evaluation in the application of knowledge and understanding throughout (AO2).
Full evidence of links between knowledge and understanding to the application of knowledge and understanding in different contexts (AO2).
Detailed, highly relevant and appropriate knowledge and understanding of place(s) and environments used throughout (AO1).
Full and accurate knowledge and understanding of key concepts and processes throughout (AO1).
Detailed awareness of scale and temporal change which is well integrated where appropriate (AO1).

Global Systems (AQA A Level Geography)

Topic Questions