What is a transnational corporation?

a company that operates in more than one country. Its operations are spread across the world.

Where are the headquarters of most TNCs?

in high-income countries. Decisions and research are based there.

Which has helped globalisation?

containerisation and the internet. Moving goods and information became cheap and fast.

Which is a benefit of a TNC to a host country?

jobs and training. People earn wages and learn skills.

Which is a problem a TNC may cause in a host country?

profits being sent abroad. The wealth created does not all stay in the country.

Globalisation and transnational corporations · Cambridge IGCSE Geography (9

In plain words

A phone designed in one country, with parts from a dozen more, assembled in another and sold in every country on Earth: that is globalisation, and the companies that organise it are among the most powerful organisations in the world.

8 things to know

Globalisation is the process by which the world's countries and people become more closely connected, through trade, investment, technology and the exchange of ideas.
Its key features: growing international trade, the spread of transnational corporations, and money, goods, people and information moving around the world faster and more cheaply.
It has been driven by cheaper transport, especially container ships and air freight, and by the internet and mobile phones.
Impacts: more trade and cheaper goods; fast spread of technology; and cultures mixing, though some fear that local cultures are being lost.
A transnational corporation (TNC) is a company that operates in more than one country.
Its headquarters and research are usually in a high-income country. Its factories are often in low-income and middle-income countries, where labour is cheaper, taxes may be lower and markets are growing.
Benefits to the host country: jobs, wages, training, new technology, exports, tax income, and roads and ports built for the company.
Problems for the host country: low wages and poor conditions, profits sent back to the home country, environmental damage, competition for local firms, and the risk that the company moves away.

Worked example

A TNC opens a clothing factory in a low-income country. Give two benefits and two problems for that country.

Benefit: thousands of jobs, with wages that are spent in local shops.
Benefit: workers learn skills, and the country earns from exports.
Problem: wages are low and hours long, and most of the profit goes to the company's home country.
Problem: if costs rise, the company may move to another country, and the jobs go.

Tips and tricks

Organise TNC impacts as social, economic and environmental, positive and negative.
The profit leaving the host country is called leakage. It is a strong point in any evaluation.

5 questions, about 2 minutes.

It lands in your notebook with its questions as flashcards.

Globalisation and transnational corporations: 5 questions and answers

These are the quiz’s questions. Do the quiz first, then come back here for the ones that got you.

What is a transnational corporation?
- a government department
- a company that operates in more than one country (the answer)
- a charity
- a small local business
Its operations are spread across the world.
Where are the headquarters of most TNCs?
- in low-income countries
- in high-income countries (the answer)
- in Antarctica
- at sea
Decisions and research are based there.
Which has helped globalisation?
- higher transport costs
- containerisation and the internet (the answer)
- closed borders
- fewer aircraft
Moving goods and information became cheap and fast.
Which is a benefit of a TNC to a host country?
- profits leaving the country
- pollution
- jobs and training (the answer)
- closure of local firms
People earn wages and learn skills.
Which is a problem a TNC may cause in a host country?
- new roads
- tax revenue
- exports
- profits being sent abroad (the answer)
The wealth created does not all stay in the country.

5 questions

Tap an answer and you’ll see straight away whether it’s right, and why.

Worksheet

3 questions, 9 marks. Write your answers on paper, then check them.

Globalisation and transnational corporations

Cambridge IGCSE Geography (9–1) 0976 · 9 marks · papermunch.org

Name ______________________________ Date ______________

Define globalisation.[2]
Show answerHide answer
The process by which the world becomes more interconnected, through trade, investment, technology and the movement of people and ideas.
I got this one
Explain why TNCs locate factories in low-income and middle-income countries.[3]
Show answerHide answer
Labour is cheaper. Taxes and regulations may be lower. They are close to new, growing markets. (Also: access to raw materials.)
I got this one
Describe two benefits and two problems of TNCs for the countries in which they operate.[4]
Show answerHide answer
Benefits: they provide jobs; they bring new technology and skills. Problems: wages may be low and conditions poor; much of the profit leaves the country.
I got this one

Answers: Globalisation and transnational corporations

1. The process by which the world becomes more interconnected, through trade, investment, technology and the movement of people and ideas.
2. Labour is cheaper. Taxes and regulations may be lower. They are close to new, growing markets. (Also: access to raw materials.)
3. Benefits: they provide jobs; they bring new technology and skills. Problems: wages may be low and conditions poor; much of the profit leaves the country.