Using case studies, discuss the social and economic impacts of TNCs upon their host countries

Firstly, most TNC’s such as Apple and Nike manufacture their products in different low-income countries in order to find reduced labour costs. This comes with many positive impacts for people within the host country, both in terms of social and economic impacts, due to a host of employment opportunities available for low skilled workers, as illustrated through Nike and its 74,000 employees. Wages are used as an injection of capital into the local economy by TNCs which increases consumption in the market and hence increases long term economic growth for the country as a result of the positive multiplier effect. This is because local people are more readily able to purchase houses, clothes, cars and other local goods, which increases economic growth. With the increased purchasing power of consumers within the host countries, the quality of life and hence standard of living for people within the country will be allowed to increase as a result. This is because, as economic growth increases (which would be accompanied by increasing tax revenues as wages rise and unemployment decreases), the amount available for government spending would increase. This means that the government of the host nation will be able to invest into education, healthcare and infrastructure in order to increase long term economic wellbeing. Therefore, it is evident that the impacts of TNCs on host countries are largely positive in terms of economic impact. However, although social wellbeing can be improved, it is often dependent upon political stability within a nation for it to be used effectively to make a positive social impact. As manufacturing locations such as China have a traditionally authoritarian rule, sensible investments are unlikely and hence, the social impacts are not expected to be overwhelmingly positive.