Define the term globalisation.
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Define the term globalisation.
Globalisation is the economic integration of different countries through increasing freedoms in the cross-border movement of people, goods and services, technology and finance.
True or False?
Globalisation is a new phenomenon that started in the last 50 years.
False.
Globalisation has been increasing for thousands of years, but improvements in technology have increased the level of interdependence between nations in the past 50 years.
Define the term multinational company.
A multinational company is a business that is registered in one country but has manufacturing operations and/or outlets in different countries.
True or False?
Globalisation has led to de-industrialisation in developed nations.
True.
Globalisation has led to de-industrialisation in developed nations.
What is meant by the term deregulation?
Deregulation is the reduction or elimination of government regulations in a particular industry.
True or False?
MNCs benefit from economies of scale.
True.
MNCs benefit from economies of scale as they operate globally and are able to increase their output to benefit from lowered costs.
What is a tax incentive.
A tax incentive is a deduction, exclusion, or exemption from paying tax, offered as an enticement by a government to attract businesses to a certain country or region.
True or False?
MNCs always bring profits back to their home country.
False.
Many MNCs have offshore bank accounts and do not necessarily bring profits back to their home country.
What is a barrier to trade?
A barrier to trade is a government-imposed restriction on the free international exchange of goods or services, such as a tariff or quota.
Define the term transfer pricing.
Transfer pricing is a method used by MNCs to report profits away from where they are generated, and in countries with lower tax rates instead.
True or False?
MNCs always create jobs for local workers.
False.
MNCs may not always create jobs for local workers; they may relocate workers from their own country to work abroad.
What is tax avoidance?
Tax avoidance is the use of legal methods to minimise tax liabilities.
How do customers in host countries benefit from MNCs?
Customers in host countries benefit from MNCs in a range of ways, including:
A wider choice of goods and services
Potentially lower prices
Better quality of goods and services.