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Multinational Companies (MNCs), such as Facebook and Amazon, locate in Ireland and contribute to economic growth - Leaving Cert Economics - Question b - 2018
Question b
Multinational Companies (MNCs), such as Facebook and Amazon, locate in Ireland and contribute to economic growth. (i) Explain the terms multinational company and ec... show full transcript
Worked Solution & Example Answer:Multinational Companies (MNCs), such as Facebook and Amazon, locate in Ireland and contribute to economic growth - Leaving Cert Economics - Question b - 2018
Step 1
Explain the terms multinational company and economic growth.
Answer
A multinational company (MNC) is defined as a business that operates in multiple countries or has business activities spanning across national borders. These firms manage production or deliver services in more than one nation, effectively influencing international markets and economies.
Economic growth refers to the increase in the gross national product (GNP) or output, which is the value of goods and services produced within a country over a specified period. It is commonly measured by the rise in national income per head, showcasing the enhanced productive capacity of an economy.
Step 2
Discuss two possible economic benefits of MNCs, other than economic growth, for the Irish economy.
Answer
One significant benefit of MNCs is the creation of employment. These companies tend to generate numerous job opportunities, directly contributing to lowering unemployment rates in Ireland. As they hire local talent and create diverse roles, they support the job market and foster employee development.
Another benefit is the increase in tax revenues. As MNCs operate and generate income, they contribute significantly to the national treasury through various taxes, such as Corporation Profits Tax. This influx of revenue enables the government to invest in public services and infrastructure projects, enhancing overall societal welfare.
Step 3
Discuss one possible economic challenge of MNCs for the Irish economy.
Answer
One notable challenge posed by MNCs is the risk of domestic firm closures. Local businesses often struggle to compete with large multinationals that can leverage economies of scale, advanced technology, and established market positions. This competition may lead to a decline of smaller enterprises, resulting in job losses and diminishing local economic activities, which ultimately can impact community livelihoods.