Positive and negative aspects of supply driven rural development
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Employment - Inward investments by TNCs helps countries by providing jobs and skills for local people. When TNCs buy local resources, products and services it brings foreign currencies to the local economy, therefore, bringing wealth to the local communities. This is known as foreign direct investment (FDI) where business enterprise in one country is owned by an entity based in another country. The money gained by local communities can be used on education, health and infrastructure therefore improving the quality of their lives. (Figure on the right shows FDI inflows frim 2007 - 2012)
Multiplier effects - At a local scale, such investment can trigger more employment through the process of cumulative causation, bringing wealth into the local economy. The location of a TNC in a region has the potential to create jobs in; companies that supply components to the plant, companies that distributes goods from the new plant, companies that supply services to the new plant from servicing plant machinery to supplying canteen.
New Methods of Working - TNCs may introduce methods of working that are new to the country. These have included quality management systems which monitor the standard of output in supplier firms and just-in-time component supply. They create more skilled workforce by transfering technology to the host country. In developing countries, more opportunities are created for female employment in low-skilled manufacturing jobs.
Multiplier effects - At a local scale, such investment can trigger more employment through the process of cumulative causation, bringing wealth into the local economy. The location of a TNC in a region has the potential to create jobs in; companies that supply components to the plant, companies that distributes goods from the new plant, companies that supply services to the new plant from servicing plant machinery to supplying canteen.
New Methods of Working - TNCs may introduce methods of working that are new to the country. These have included quality management systems which monitor the standard of output in supplier firms and just-in-time component supply. They create more skilled workforce by transfering technology to the host country. In developing countries, more opportunities are created for female employment in low-skilled manufacturing jobs.
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