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Growth of importance of MNCs in recent decades

S:\triplea_resources\DP_topic_packs\economics\student_topic_packs\media_microeconomics\images\globe.jpgIncreasingly, giant MNCs have come to dominate markets on a world scale, such that they now account for a significant proportion of the world's output. This increase in importance may be attributed to various factors, including:

  • The growth of international trade
  • The trend towards globalisation
  • The desire to achieve profit maximisation through economies of scale and strategies such as transfer pricing
  • The growth of powerful economic blocs, e.g. the EU, NAFTA
  • Advances in communications and information technology
  • The liberalisation of former communist economies
Syllabus: Explain the characteristics of economically less developed countries that attract FDI, including:

  • low cost factor inputs,
  • a regulatory framework that favours profit repatriation and
  • favourable tax rules.
Hopefully these are pretty self explanatory.