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Industry in LEDCs

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What are the formal and informal sectors?Why do transnational corporations locate in LEDCs?What are the advantages and disadvantages for the host country?

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Most LEDC cities have grown rapidly and the number of people is often far greater than the jobs that are available.

What are the formal and informal sectors?

The formal sector is controlled by the government and large companies.

People therefore have to find work for themselves. This is called the informal sector of employment.

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Formal and informal employment

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Formal and informal employment

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What is the informal sector?From the list below tick two jobs that belong to the informal sector:

Shop assistant

Shoeshiner

Police officer

Fruit vendor

Worker in a bottle factory

Examination question

In LEDCs many people work in the informal sector.

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What are the formal and informal sectors?Why do transnational corporations locate in LEDCs?What are the advantages and disadvantages for the host country?

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Transnational companies have the power to choose where to locate their factories. They are attracted to LEDCs due to the large pool of labour, low wages and taxes and fewer restrictions.

A transnational company has factories and offices in several countries. Therefore it is a global company in that it operates across national boundaries.

Transnational corporations in LEDCs

The headquarters of a transnational company is usually in an MEDC with branch factories worldwide.

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What are the formal and informal sectors?Why do transnational corporations locate in LEDCs?What are the advantages and disadvantages for the host country?

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Effects of TNCs in LEDCs: good or bad?

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Now summarize the positives and the negatives.

Effects of TNCs in LEDCs

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Fair Olympics Campaign

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Use the information here and your own research to decide whether TNCs benefit the environment.

Do TNCs benefit the environment?

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continent

salt

silver

borate

uranium

Complete the table. Why is this company described as a transnational company (TNC)?Use examples to examine the advantages and disadvantages that TNCs bring to LEDCs.

Examination question

Study the map showing some of Rio Tinto’s mines.

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Industry in LEDCs quiz

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Key

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The informal sector of employment is created by people finding work for themselves. This is usually due to the rapid growth of LEDC cities. Some examples of jobs are scrap collectors, street entertainers and shoeshiners.

The formal sector of employment is controlled by the government and large companies. Some examples of formal jobs are factory workers, shop assistants and nurses.

A transnational company (TNC) is a global company in that it operates across national boundaries. They are attracted to the large pool of labour, low wages, taxes and fewer restrictions of LEDCs.

TNCs bring economic, social and environmental advantages and disadvantages to the host countries.