Multinational Corporations
What is a company that operates in two or more countries?
A multinational corporation (MNC)
What is the term for categorizing countries into economic classes?
World Systems Theory — a framework that divides countries into Core, Semi-Periphery, and Periphery based on their economic development and global roles.
What is Stage 1 of Rostow's model?
A traditional society — primarily agricultural, with limited technology and a static economy.
It’s the idea that countries rich in natural resources often experience slower economic growth and worse development outcomes than countries with fewer resources.
the paradox of plenty
Name one supranational organization.
The European Union (EU). (Other acceptable answers: United Nations (UN), NATO, ASEAN, AU, WTO, OPEC, etc.)
What is a benefit of multinationals for developing countries?
They provide job opportunities, introduce new technologies, and bring in foreign direct investment, which can stimulate economic growth.
What is the Core in economic classes?
Core countries are highly developed nations with strong economies that dominate global trade and often exploit resources from less developed countries (e.g., U.S., Japan, Germany).
What characterizes Stage 3 of Rostow's model?
The Take-Off stage — marked by rapid industrialization, increased investment, and the growth of key industries.
Name one cause of the resource curse.
Over-reliance on resource exports can lead to neglect of other sectors like education, infrastructure, and manufacturing.
Which organization purpose is to promote international peace, security, cooperation, and human rights around the world.
The United Nations
How do multinationals impact local economies?
They can boost the economy by creating jobs and infrastructure, but they may also hurt local businesses and repatriate profits to their home countries.
Name a semi-periphery country.
China. (Other acceptable answers include Mexico, Brazil, or South Africa.)
What does Stage 4 of Rostow's model refer to?
The Drive to Maturity — when the economy diversifies, innovation spreads, and industries become more complex and efficient.
It can lead to a stronger (overvalued) currency, which makes other exports less competitive — a phenomenon known as "Dutch disease."
resource wealth affect currency
What does NATO stand for?
North Atlantic Treaty Organization.
Why do multinationals seek cheap labor?
To lower production costs and increase profits, as wages are typically much lower in developing countries than in developed ones.
What is the Periphery?
Periphery countries are the least developed; they rely on exporting raw materials and labor, and are often exploited by Core and Semi-Periphery countries.
What is the significance of Stage 5?
The Age of High Mass Consumption — where consumer goods are widely available, living standards are high, and the economy shifts toward services and leisure industries.
How does the resource curse attract corruption?
The large profits from resources can lead to power struggles, mismanagement, and officials prioritizing personal gain over national development.
Name two member states of the EU.
See List
What is a negative impact of multinationals on developing nations.
Multinationals may exploit labor with poor working conditions and low pay, damage the environment, and influence local governments to create favorable laws that don’t benefit the wider population.
How do economic classes affect globalization?
They shape the flow of goods, services, and labor — with Core countries benefiting most, while Periphery countries remain dependent and underdeveloped, reinforcing global inequality.
How did Japan's post-WWII economy exemplify Rostow's model?
Japan rapidly industrialized and modernized, moving through the Take-Off and Drive to Maturity stages to become a highly developed economy with mass consumption.
What do you need to of manage natural resources?
Managing resources requires strong institutions, transparency, and long-term planning; without these, resource wealth can fuel inequality, conflict, and underdevelopment instead of prosperity.
How do supranational organizations impact global policy?
They coordinate international actions on issues like trade, security, and human rights, influence national policies, and promote cooperation between countries.