TNCs Industries

Manufacturing Industry:

• TNCs often locate in areas of industrial concentrations of create concentrations

• A major factor promoting this is external economies of scale (agglomeration economies)

• These advantages arise outside the company

• They can be categorised into:

 - Localisation economies
 • Occur when firms linked by the purchase of materials and finished goods locate together - reducing transport costs between supplies and customers

 - Urbanisation economies
  • Locate near infrastructure eg. locate near a train station to transport goods easier


Service Industry:

• In recent years there has been a shift of investment towards service industries
 - Services now account for the largest share of inward FDI in many countries
 - The continuous process of liberalisation and deregulation of key services has led to a large inflow of FDI into industries that were previously dominated by the state or domestic private sector firms (eg. EDF)
 - A growing number of the largest TNCs are in the services sector
 - The ICT revolution has opened up overseas investment in tradable services - as the cost of sending information across the world is now low so services can be split into components which can be located in different places (eg. call centres in India)