The effects of multinationals on host countries
- Employment: MNC’s often create significant job opportunities in host countries, not just in quantity but also quality. They often offer comprehensive training programs, enhancing the skills of the local workforce beyond what might be available in domestic firms.
- Extended choice: MNC’s typically bring a wider range of products and services to the host country.
- Tax revenues: Profitable MNC’s can be a significant source of tax income for host countries, including corporate taxes on profits as well as indirect contributions through employee income taxes and various sale-related taxes.
- Increase in GDP: By engaging with local suppliers and making capital investments, MNC’s contribute directly to the host country’s GDP.
- Competitiveness: MNC’s often spur domestic companies to innovate and improve their efficiency to remain competitive, making them more productive and efficient.
- Too competitive: MNC’s often have significant financial and technological advantages, which can lead to uneven competition and push domestic firms out the market.
- Culturally insensitive: As MNC’s bring over their corporate culture and products, this can overshadow local traditions and practices.
- No reinvestment in host: MNC’s may choose to send profits back to their home country rather than reinvesting in the host country.
- Tax avoidance: MNC’s sometimes use strategies to reduce their tax payments in host countries by shifting profits to countries with lower tax rates. While often still legal, it significantly reduces the tax revenue that host governments receive.
- Environmental: MNC’s can prioritise profits over sustainable environmental practices. Recent data from Carbon Majors shows that a 57 multinationals were to blame for 80% of global carbon emissions between 2016 and 2022.
Recent Multinational Activity in the UK
The project is the first Google-owned and designed building outside the US. London major Sadiq Khan said “this project represents a real vote of confidence in London, in our communities and in our flourishing tech sector”. Once finished, it will have roughly 4,000 staff. Google employs about 6,400 people in the UK and has set itself of reaching 10,000.
Google’s strong presence in London reinforces it’s position as a major tech hub and can draw in skilled professionals. Other large tech companies might follow in Google’s footsteps and set up operations in London.
Multinationals have also set up operations in Scotland 🏴
Dunfermline distribution centre
When the distribution centre opened in 2011, it created more than 1,000 jobs and now up to 1,200 workers and an additional 1,000 seasonal workers who help out during the festive period.
Amazon also has a development centre and customer service centre in Edinburgh, delivery stations in Motherwell, Edinburgh and Dundee, and Prime Now distribution sites in Glasgow and Edinburgh. Amazon has employed more than 2,500 people and has over 200 apprentices in Scotland.
Since 2010, Amazon has invested over £3.1 billion in Scotland, which has led to the production of goods and services that contributed an estimated £2.9 billion to Scotland’s GDP since 2010 (Amazon). In partnership with the charity Magic Breakfast, Amazon has delivered more than 460,000 healthy breakfasts to vulnerable children and schools across Scotland (Amazon).
To explore the impact Amazon has on the rest of the UK, check out this page ⬇️
