Transnational Corporations

Transnational corporations (TNCs) are very big companies which deal world wide (global). They have an administrative HQ, a research and development establishment and productions centres in one country and at least one, but often many more, branches and/or production centres overseas. Over the past 20 years major technological advances in transport (containerisation, bulk carriers and air freight), along with developments in computerisation and communications (satellites and internet), have brought about the globalisation of the world's economy and resultant growth in size and number such as TNCs.
Approximately 90% of TNCs are based in MEDCs, especially the USA, France, Germany, the UK and Japan.
Overseas branches are in LEDCs because:

• Production costs are usually less than in MEDCs, with lower wages, cheaper land and lower transport costs.
• Governments of LEDCs want to host TNCs as they often encourage further economic development (multiplier effect), and so they offer financial incentives such as low rates and taxes.

Recently, firms in newly industrialised countries (NICs), especially in the 'tiger economies'  of Eastern Asia, which produce machinery, electronics and cars, have become TNCs. As wage costs have risen in their home countries they have extended