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MNCs and Low Unemployment

Question

Discuss whether or not MNCs are likely to set up in countries with low unemployment.

Category:

Firm Behavior and Strategies

Frequently asked question

Preview Answer

I. 🍃Introduction
- Definition of MNCs
- Importance of understanding why MNCs choose to locate in certain countries

II. Reasons why MNCs might choose to locate in a country
- High incomes/GDP leading to high demand for products and increased profits
- Experienced workforce leading to higher productivity and lower costs of production
- Employment in primary sector with lower wages and capital-intensive operations
- High tax revenue and government subsidies leading to lower costs for MNCs

III. Reasons why MNCs might not choose to locate in a country
- High wages and fringe benefits leading to increased costs of production
- Uncompetitive with other MNCs in other countries leading to reduced profits
- Need for training of low-skilled workers leading to increased costs
- Preference for low-wage countries leading to increased profits

IV. Potential challenges for MNCs in locating in certain countries
- Demand-pull and cost-push inflation leading to increased costs
- Difficulty in navigating cultural and political differences
- Potential for negative public perception and backlash

V. 👉Conclusion
- Importance of considering both the benefits and challenges of locating in a country
- Need for ongoing evaluation and adaptation of MNC strategies.

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