Japanese companies invest in the EU and Pacific Rim countries for several reasons. This allows them access to larger markets, lower production costs through cheaper labor, and the ability to bypass tariffs by manufacturing in these locations. The investment benefits both the Japanese companies and the recipient countries by creating jobs, increasing tax revenue, and improving infrastructure and skills. However, there are also potential disadvantages like closure threats in recessions and environmental damage.

1. The role of TNCs in international development Japanese investment in EU and the Pacific Rim countries

5. Facts and figures 47,581 Sony 62,568 Nissan 111,052 Toyota 184,365 Mitsubishi 1994 revenue US $m Company 146,076 Denmark 68,949 Singapore 70,626 Malaysia 1,017,306 UK 26,164 Bangladesh GNP US$m Selected countries

9. Location of some Japanese companies in EU …. Where & Why ?

10. Adv / disadv of TNCs Refer to page 189 / 190 There is a large market for cars in EU Government earns tax revenue from company and from workers New working practices have been introduced e.g. ‘just in time’ method. This enables UK workforce to operate more efficiently in increasingly competitive markets Regional aid is available from EU and / or UK to help with capital costs Governments have given financial incentives to locate in old industrial areas which experience high unemployment Disadvantages Advantage to UK and Region Advantage to TNC Labour costs are cheaper in UK than in Japan Reduce the cost of transporting cars from Japan to EU Bypass EU tariffs and escape paying import taxes on cars they manufacture and sell in Europe Possible closure threat: in a recession , the EU branch plants would be the first to be closed creating job losses Other companies attracted to set up component companies in the area Research and development: this sector with the most highly paid jobs tends to remain in Japan Greater consumer choice : greater variety of models from different manufacturers are available Competition : EU firms have had to compete with cheaper Japanese models Jobs are created not only in the assembly plant but also other component factories

11. There is a large market for cars in EU Government earns tax revenue from company and from workers New working practices have been introduced e.g. ‘just in time’ method. This enables UK workforce to operate more efficiently in increasingly competitive markets Regional aid is available from EU and / or UK to help with capital costs Governments have given financial incentives to locate in old industrial areas which experience high unemployment Disadvantages Advantage to UK and Region Advantage to TNC Labour costs are cheaper in UK than in Japan Reduce the cost of transporting cars from Japan to EU Bypass EU tariffs and escape paying import taxes on cars they manufacture and sell in Europe Possible closure threat: in a recession , the EU branch plants would be the first to be closed creating job losses Other companies attracted to set up component companies in the area Research and development: this sector with the most highly paid jobs tends to remain in Japan Greater consumer choice : greater variety of models from different manufacturers are available Competition : EU firms have had to compete with cheaper Japanese models Jobs are created not only in the assembly plant but also other component factories

12. There is a large market for cars in EU Government earns tax revenue from company and from workers New working practices have been introduced e.g. ‘just in time’ method. This enables UK workforce to operate more efficiently in increasingly competitive markets Regional aid is available from EU and / or UK to help with capital costs Governments have given financial incentives to locate in old industrial areas which experience high unemployment Disadvantages Advantage to UK and Region Advantage to TNC Labour costs are cheaper in UK than in Japan Reduce the cost of transporting cars from Japan to EU Bypass EU tariffs and escape paying import taxes on cars they manufacture and sell in Europe Possible closure threat: in a recession , the EU branch plants would be the first to be closed creating job losses Other companies attracted to set up component companies in the area Research and development: this sector with the most highly paid jobs tends to remain in Japan Greater consumer choice : greater variety of models from different manufacturers are available Competition : EU firms have had to compete with cheaper Japanese models Jobs are created not only in the assembly plant but also other component factories

13. There is a large market for cars in EU Government earns tax revenue from company and from workers New working practices have been introduced e.g. ‘just in time’ method. This enables UK workforce to operate more efficiently in increasingly competitive markets Regional aid is available from EU and / or UK to help with capital costs Governments have given financial incentives to locate in old industrial areas which experience high unemployment Disadvantages Advantage to UK and Region Advantage to TNC Labour costs are cheaper in UK than in Japan Reduce the cost of transporting cars from Japan to EU Bypass EU tariffs and escape paying import taxes on cars they manufacture and sell in Europe Possible closure threat: in a recession , the EU branch plants would be the first to be closed creating job losses Other companies attracted to set up component companies in the area Research and development: this sector with the most highly paid jobs tends to remain in Japan Greater consumer choice : greater variety of models from different manufacturers are available Competition : EU firms have had to compete with cheaper Japanese models Jobs are created not only in the assembly plant but also other component factories

14. May 2000 P2

21. May 2002

22. Key terms Primary products Balance of trade Multiplier effect GNP Labour intensive Export Import Trade surplus TNC Definition Term

23. (3 marks) May 2002