How do MNCs develop? (WJEC Eduqas GCSE Geography B): Revision Note
Exam code: C112
Specification links
The notes on this page cover part 1.3.3 of the WJEC Eduqas B specification – What are the causes and consequences of uneven development?
The reasons MNCs have for locating in countries at different levels of development, including in the UK and India.
The advantages and disadvantages of the development of global MNCs (for the MNC) and the consequences for the host country, to include economic, social and environmental consequences.
Why do MNCs locate overseas?
MNCs relocate to countries with varying levels of development to take advantage of local advantages such as:
New markets
Lower costs
Increase profits
Access natural resources
Reasons for locating in the UK
Multinational corporations (MNCs) usually choose developed economies like the UK because they want to find new markets and assets
Large and wealthy markets
The UK has a large and wealthy consumer base with a lot of buying power
This means that there is a lot of market potential and chances to boost sales
Companies locate there to reach customers directly and respond to local demand
Example: Apple and Toyota have European headquarters in the UK to access the European market
Access to skilled labour and talent pool
The UK has some of the best universities in the world and a highly skilled workforce
This means that companies can hire scientists, engineers, and other specialists in fields like technology, finance, life sciences, and research and development
Innovation
Innovation hubs like London and Cambridge make it easier for startups, corporations, and universities to work together
This lets MNCs do research and development (R&D) and create new technologies
Stable and open business environment
The UK has a stable economy, a legal system that is clear and open to everyone, and a business environment that is competitive with little red tape, all of which lowers risk for investors
Strategic hub and connectivity
The UK is an important commercial and logistical link between Europe and North America
Its advanced infrastructure, such as its transport and internet connections, makes it easier for businesses and people from other countries to do business together
Access to capital, raw material and resources
Because London is a major global financial centre, it's easier for MNCs to get money for investments
Some MNCs are located in areas rich in natural resources — for example, BP and Shell operate globally where oil is available
Language and cultural ties
Strong cultural and business ties with Commonwealth countries, such as India, and English as the international business language, make it easier to communicate and grow into other global markets
Global image and brand recognition
MNCs expand internationally to increase brand awareness and customer loyalty
Example: Unilever sells food and hygiene products in both HICs and NICs, adapting products to local tastes
Advantages for the MNC in HICs:
Access to wealthy consumers and advanced research facilities
Skilled workforce for management and product design
Reliable infrastructure and stable business environment
Disadvantages for the MNC in HICs:
High labour and land costs
Strict environmental and employment regulations
Why do MNCs choose to locate in developing nations like India?
MNCs mostly go to developing economies like India to find ways to save money and get more resources, as well as to gain access to new, fast-growing markets
Large and growing consumer markets
India has a huge population, a fast-growing economy, and a consumer base that is getting richer
This means that when home markets are full, there is a lot of room for market expansion
Lower production costs
Lower labour and operational costs are a big reason why MNCs want to move their operations to more efficient countries
This is especially true in manufacturing and some service sectors, like IT
Access to raw materials
Developing countries often have many natural resources that draw MNCs working in primary industries like agriculture, energy, and mining etc.
Government policies and incentives
To encourage foreign investment and boost economic growth, governments in developing countries often offer incentives like lower taxes, subsidies, grants, or special economic zones (SEZs)
Get access to a large talent pool (specific to India)
India has a large, educated, English-speaking workforce with high skill levels in IT and software, making it a cheaper place to locate talented people
Less strict rules
Sometimes, less strict labour and environmental laws in developing countries can make it cheaper for MNCs to follow the rules
Getting around trade barriers
When MNCs set up factories in developing countries, they can avoid the import taxes and limits that would normally be put on goods coming from their home country
Advantages for the MNC in NICs:
Low-cost labour and a large workforce
Expanding consumer market with a young population
English-speaking and technically skilled employees
Disadvantages for the MNC in NICs:
Poor transport and power infrastructure in some regions
Bureaucratic regulations and corruption can delay projects
Urban congestion and pollution increase production costs
Worked Example
Explain two reasons why multinational companies locate in countries such as the UK and India.
[4 marks]
Answer
MNCs locate in the UK because it has a highly skilled, English-speaking workforce and good transport links to European markets. [1 mark] They are also located in India to take advantage of lower labour costs and a large, growing consumer market. [1 mark] These factors help companies reduce costs and increase profit. [1 mark] Both countries also offer tax incentives to attract investment. [1 mark]
Marking guidance
1–2 marks: Simple statements about MNCs wanting cheaper labour or new markets
3–4 marks: Developed explanation with examples and clear link between the country’s characteristics and company benefits
Examiner Tips and Tricks
Always name the countries in your answer — ‘in the UK…’, ‘in India…’
Link each reason to how it benefits the MNC (e.g. ‘This reduces costs…’, ‘This increases sales…’)
Avoid writing about impacts on people or the environment — the question asks about reasons for location
Advantages brought by MNCs
Economic
Job creation
MNCs directly and indirectly create jobs, both within their own operations and in supporting local businesses
Infrastructure development
MNCs may invest in or improve transport links and other infrastructure
MNCs introduce new technologies and modern machinery to a country
The multiplier effect
MNCs pay taxes, which provide governments with additional revenue to invest in public services like healthcare and education
In the UK, FDI from MNCs like Nissan and Tata Motors supports over 200,000 jobs
In India, MNCs have contributed to over 25% of GDP growth since 2000 (World Bank, 2024 (opens in a new tab))
Local industry growth
MNCs may form joint ventures or partnerships with local businesses, such as exploiting natural resources, as they may lack the means to do it independently
Social
Improved gender equality, education and skills
Employees receive training in new methods and skills, which can improve the overall skill level of the local workforce
Improved gender equality in workplaces, such as technology and services
Increased choice
Consumers benefit from a wider variety of goods and services, often at more competitive prices
Environmental
MNCs can introduce cleaner, more efficient technology
Many operate corporate sustainability programmes (e.g. Unilever’s Sustainable Living Plan)
Impact of MNCs on the host country
Economic
Low wages
Workers in host countries may be paid very low wages, often below what is needed for a decent quality of life
Profit repatriation
Profits generated may be leaked back to the MNC's home country, rather than being reinvested in the host economy
Tax avoidance
MNCs may use measures to avoid paying taxes in the host country
Social
Poor working conditions
Companies may be accused of cutting corners, leading to poor health and safety standards
Deskilled jobs
MNCs may create low-paid, repetitive, deskilled jobs that offer little opportunity for skill development
Job insecurity
Factories move to another country for even cheaper labour, which makes jobs insecure for the local workforce
Overcrowding
Rural–urban migration leads to overcrowding in cities like Delhi or Bangalore
Cultural dilution
MNCs can sometimes impose their own culture on the host country
Local cultures may weaken as Western brands and lifestyles spread
Environmental
Pollution
Rapid industrialisation increases pollution, waste, and energy consumption
They may over-exploit natural resources, such as over-extracting water, which can lead to shortages for local communities
Poor disposal of packaging and electronic waste
Biodiversity loss
Deforestation and land clearance for factories reduce biodiversity
Political influence
MNCs can influence government policies to lower environmental regulations or negotiate on wages and land
Worked Example
Explain one advantage and one disadvantage to a host country of the development of multinational companies.
[4 marks]
Answer
In India, multinational companies such as Tata Motors have created thousands of jobs and improved infrastructure [1 mark], which increases income and living standards. [1 mark] However, most profits are sent back to the company’s home country [1 mark], meaning less money stays in India to support local development. [1 mark]
Marking guidance
1–2 marks: Simple statements about the benefits or drawbacks of MNCs
3–4 marks: Developed explanation with named country and company example, showing cause and effect
Examiner Tips and Tricks
Always include a named MNC and host country for top marks.
Use connectives like 'because', 'which means that', and 'as a result' to show understanding.
Keep balance — one clear advantage and one clear disadvantage explained in full.
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