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Economics · Oct / Nov 2020 · Paper 13 · Question 29

2281Globalisation and trade restrictions

Many low-income countries rely on multinational companies (MNCs) to provide economic development. What is a disadvantage of this for the low-income country?

  1. ALocal firms close because MNCs are more efficient.
  2. BNew production techniques are introduced.
  3. CThe balance of payments may improve.
  4. DThe MNCs have to pay taxes on their profits.

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Correct answer: A. Local firms close because MNCs are more efficient.

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