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'Transnational corporations (TNCs) are the most significant factor in creating unequal flows of people and money within global systems.' With reference to a TNC, assess the extent to which you agree with this statement. - AQA - A-Level Geography - Question 1 - 2018 - Paper 2
Question 1
'Transnational corporations (TNCs) are the most significant factor in creating unequal flows of people and money within global systems.' With reference to a TNC, a... show full transcript
Worked Solution & Example Answer:'Transnational corporations (TNCs) are the most significant factor in creating unequal flows of people and money within global systems.' With reference to a TNC, assess the extent to which you agree with this statement. - AQA - A-Level Geography - Question 1 - 2018 - Paper 2
Step 1
Assess the role of the global system and the flows of people and money
Answer
The global system encompasses economic, social, and political dimensions that influence the movement of people and resources. TNCs operate within this framework, impacting local economies and labor markets. For instance, the inequalities between developed and developing nations often manifest through the operations of TNCs. Countries with rich natural resources may experience wealth disparities, as TNCs typically repatriate profits to their home countries. This highlights the unequal flow of money created by TNCs.
Step 2
Evaluate a specific TNC
Answer
Taking Nike as a case study, we can see how TNCs create unequal flows of labor and money. Nike operates factories in several developing countries, predominantly in Asia, where labor costs are significantly lower. This outsourcing brings both employment opportunities and exploitation concerns. While local economies benefit from employment, workers face low wages and poor working conditions, leading to a significant flow of money out of the host countries back to the US.
Step 3
Consider the socio-economic effects on host countries
Answer
The socio-economic ramifications of TNC operations are substantial. For example, in Vietnam, Nike's presence has increased employment but also exacerbated worker exploitation and poverty. Many local manufacturers cannot compete with the low-cost structures established by TNCs, leading to unemployment and economic dependency. Therefore, while one could argue that TNCs promote economic growth, they also perpetuate economic disparities.
Step 4
Assess the overall contribution of TNCs to global inequality
Answer
Overall, TNCs play a complex role in the global system. They contribute to economic development in certain areas while simultaneously reinforcing inequality through practices such as profit repatriation and labor exploitation. Thus, the statement holds merit; TNCs are indeed significant factors in creating unequal flows of money and people, highlighting the balance needed between economic growth and ethical corporate practices.