Transnational corporations | AQA A-Level Sociology

For Specification 7192

AQA A-Level Sociology | Free Revision Notes

Estimated study time: 75 minutes

Transnational corporations A-Level Sociology revision examines the role of large businesses operating across national boundaries in development. AQA requires students to understand the role of transnational corporations (TNCs) in local and global strategies for development, alongside non-governmental organisations and international agencies. TNCs can bring investment, employment and skills, but their size, mobility and environmental impact create important sociological debates. This develops ideas from globalisation, political and economic relationships [Globalisation, political and economic relationships] and prepares you for later work on trade, industrialisation and the environment.

Learning Objectives 🎯

By the end of this revision page, you should be able to:

• Define transnational corporations (TNCs) and explain their global role.

• Explain how TNCs may contribute to development through investment, employment and skills.

• Examine how TNCs may affect local businesses, workers and patterns of employment.

• Explain how the activities of TNCs may affect the environment.

• Analyse the significance of the size and power of TNCs for local and global development strategies.

• Evaluate different sociological interpretations of whether TNCs promote or restrict development.

Revision Notes 📚

Transnational corporations A-Level Sociology revision: what are TNCs?

A transnational corporation (TNC) is a corporation whose activities extend across national boundaries.

AQA's specimen mark scheme identifies the global nature, size and power of TNCs as important aspects of their role in development. It also identifies their involvement in foreign direct investment, employment, training, local businesses and pay and employment policies.

TNCs are therefore important because economic activity is not necessarily contained within one society.

A corporation may connect societies through:

• capital and investment

• production

• employment

• training

• international markets

• movement of operations

• use of natural resources

This makes TNCs an important part of the processes examined in globalisation, political and economic relationships [Globalisation, political and economic relationships].

Why are TNCs important for development?

AQA requires students to examine the role of TNCs in local and global strategies for development.

TNCs may contribute to development because their economic activities can affect:

• investment

• industrialisation

• employment

• skills

• local businesses

• women's employment

• the environment

However, these effects can operate in different directions.

TNC involvement may create opportunities for development, while also creating costs or inequalities.

The key sociological question is therefore not:

"Are TNCs good or bad?"

A better question is:

Who benefits from TNC activity, who bears the costs, and how far do its economic effects produce wider development?

Foreign direct investment

One important role of TNCs is the foreign direct investment of capital.

Foreign direct investment involves capital being invested by an organisation in economic activity in another society. AQA specifically identifies this as relevant when explaining the impact of TNCs in developing countries.

Investment can enable:

• factories or other workplaces to operate

• production to expand

• employment to be created

• industrial activity to develop

The possible development chain is:

TNC investment → increased economic activity → employment and production → possible economic growth → potential development

This provides an important argument in favour of TNC involvement.

However, economic investment alone is not proof of wider development. Students should also consider what happens to employment, local businesses, inequalities and the environment.

TNCs and industrialisation

TNC investment can contribute to industrialisation, particularly where corporations establish manufacturing or other forms of production.

AQA's 2024 mark scheme identifies employment in workshops and factories, including those operated by TNCs, as one possible consequence of industrialisation in developing societies.

Industrialisation can change the structure of employment by increasing:

• factory and workshop employment

• employment in the formal sector

• specialised divisions of labour

• opportunities for training

• opportunities for career development and social mobility

These processes are explored more fully in trade and industrialisation [Trade and industrialisation].

Employment creation

One of the clearest possible contributions of TNCs to development is the creation of employment.

AQA's specimen paper directly assessed how TNCs may affect employment in developing countries.

Employment can potentially contribute to development by providing people with:

• wages

• greater economic resources

• work experience

• training

• opportunities to gain skills

AQA's specimen mark scheme also identifies the employment of women as a relevant effect of TNC activity.

The possible relationship is:

TNC establishes economic activity → workers gain employment → workers receive income → economic opportunities increase

However, the scale and quality of employment matter.

The formal sector

Industrialisation associated with TNC activity may increase employment in the formal sector.

AQA's 2024 mark scheme recognises growth in formal-sector employment as one effect of industrialisation.

Formal employment may provide more permanent or secure forms of work than some existing employment patterns.

This can potentially contribute to development by increasing people's economic security.

However, students should avoid assuming that every job created by a TNC has the same pay, conditions or security.

AQA's specimen mark scheme explicitly recognises pay and employment policies as relevant to evaluating TNCs.

Training and skills transfer

TNCs may provide opportunities for training and skills transfer.

AQA identifies this as a key possible effect of TNC involvement in developing societies.

Workers may gain skills through their employment that increase their capabilities and future opportunities.

A possible analytical chain is:

TNC employment → training → workers gain skills → greater human capital → improved employment opportunities → possible development

This links the role of TNCs to employment and education [Employment and education].

Career development and social mobility

Training may lead to opportunities for career development and social mobility.

AQA's 2024 mark scheme explicitly identifies training, career development and social mobility as potential consequences of industrialisation.

This means the effects of TNC employment may extend beyond immediate wages.

If employees acquire qualifications, experience or specialist skills, their future economic opportunities may improve.

However, the extent of this benefit depends on:

• the kinds of jobs created

• whether training is available

• the skills required

• opportunities for progression

The existence of a TNC does not automatically guarantee all workers significant upward mobility.

Women and employment

TNC activity and industrialisation may also affect gender patterns of employment.

AQA's specimen mark scheme identifies the employment of women by TNCs as relevant, while the 2024 mark scheme states that industrialisation may create more paid employment opportunities for women.

From a development perspective, greater access to paid work may increase economic opportunities for women.

This connects to the wider requirement to consider gender as an aspect of development, which is explored fully in gender and development [Gender and development].

However, employment itself does not demonstrate that gender inequality has disappeared.

A sociological analysis should distinguish between:

• greater access to employment

• equality in pay, conditions, status and opportunities

Changes to traditional employment patterns

TNC-led industrialisation may alter existing patterns of work.

AQA's 2024 mark scheme recognises that industrialisation may lead to:

• fewer people working in farming and fishing

• more people working in workshops and factories

• a more specialised division of labour

This demonstrates how TNCs may help reshape an economy rather than simply add a few new jobs.

A possible chain is:

TNC investment → expansion of industrial employment → decline in some traditional forms of work → changing employment structure

Whether this represents development depends on the quality and distribution of the new opportunities.

Capital-intensive production

A major limitation is that some TNC activity is capital intensive.

AQA's specimen mark scheme explicitly identifies the capital-intensive nature of some TNC activity as an analytical issue.

Capital-intensive activity relies relatively heavily on capital, machinery or technology.

This means large amounts of investment and production do not necessarily produce equally large numbers of jobs.

For example, the sociological reasoning is:

large TNC investment → high level of production → limited labour requirement → fewer employment opportunities than expected

This weakens the argument that foreign investment automatically leads to widespread employment-based development.

Economic growth versus employment

This distinction is important.

A TNC might contribute to increased economic activity while making a smaller contribution to employment.

Students should therefore separate:

• the amount of investment

• the amount of production

• the amount and quality of employment created

These are related but not identical.

This is an excellent evaluation point because it prevents you from treating economic growth as automatic evidence that the whole population benefits.

TNCs and local businesses

AQA's specimen mark scheme explicitly identifies the effect of TNCs on local businesses as relevant when considering their impact on employment.

A large corporation entering an economy can affect existing producers and employers.

TNC activity may create new economic opportunities, but it may also create competition for local businesses.

If local businesses are negatively affected, employment gained through TNC activity may be partly offset by employment lost elsewhere.

A useful analytical chain is:

TNC enters market → competition with local businesses → some local businesses lose economic activity → possible loss of local employment

This creates a more balanced evaluation of development.

Local development and TNCs

At the local level, TNCs may influence development through:

• employment

• wages

• training

• skills

• career opportunities

• women's access to paid work

• changes to local industries

• effects on existing businesses

• use of local resources

• environmental effects

This means the local effect of a TNC cannot be judged using only one indicator.

For example, a new production facility may create employment but also contribute to pollution.

Development therefore involves weighing different consequences.

Global development and TNCs

At the global level, TNCs connect economic activity across societies.

Their global character means they can:

• invest capital internationally

• locate economic operations in different societies

• link production across national boundaries

• participate in globalised markets

AQA material on the transnational capitalist class also recognises that owners and controllers of TNCs may move operations between countries in search of profit.

This mobility helps explain why TNCs may possess significant economic power.

The size and power of TNCs

AQA specifically identifies the size and power of transnational corporations as relevant knowledge.

This matters because relationships between TNCs and developing societies may not involve actors with equal economic resources.

Large corporations may have substantial control over:

• investment decisions

• where production takes place

• employment decisions

• movement of operations

Their global reach can therefore give TNC decisions important consequences for local economies.

Mobility of TNC operations

Because TNCs operate internationally, economic activities can be located in different societies.

AQA's 2023 Paper 2 describes TNC owners and controllers as moving operations between countries in search of profit.

This creates opportunities for some societies when investment arrives.

However, it can also create vulnerability if activities are moved elsewhere.

This connects the role of TNCs with the broader consequences of globalisation examined in globalisation, political and economic relationships [Globalisation, political and economic relationships].

A positive interpretation of TNCs

One interpretation emphasises the contribution TNCs can make to development.

The argument is based on their ability to provide:

• foreign direct investment

• industrial activity

• employment

• training

• skills

• career opportunities

• opportunities for women to enter paid work

AQA assessment materials explicitly recognise these possible benefits.

From this perspective, TNCs can help integrate developing societies into wider economic activity and contribute to processes associated with development.

Modernisation theory and TNCs

Modernisation theory can provide a positive interpretation of TNC involvement.

Modernisation approaches emphasise economic growth, industrialisation and the transformation of societies.

TNC investment can therefore be interpreted as supporting development where it:

• increases industrialisation

• introduces new forms of employment

• increases skills

• contributes to economic growth

Modernisation theory is recognised by AQA as one of the major perspectives used to explain development, while AQA examiner materials note that students successfully use modernisation and dependency perspectives to develop answers about industrialisation and employment.

A modernisation interpretation might therefore construct the following chain:

TNC investment → industrialisation → employment and skills → economic growth → development

Evaluating the modernisation interpretation

The main strength of this argument is that TNCs can clearly create economic activity.

However, several questions remain:

• How many jobs are created?

• Are activities capital intensive?

• What happens to local businesses?

• Who gains the new employment?

• What are the environmental consequences?

• Does economic growth produce wider improvements?

Modernisation may therefore identify genuine opportunities while giving insufficient attention to inequalities in how the benefits and costs are distributed.

Dependency theory and TNCs

Dependency theory offers a more critical interpretation.

Dependency perspectives argue that development and underdevelopment need to be understood through unequal relationships between societies.

TNCs are relevant because their large size, global nature and ability to move operations make them powerful actors within international economic relationships.

From this perspective, foreign investment should not automatically be treated as development.

The critical question is:

Does TNC involvement strengthen the long-term development of the host society, or reproduce unequal dependence on powerful external economic actors?

AQA repeatedly recognises dependency theory as a perspective through which development, industrialisation and global economic change can be evaluated.

Dependency theory and local businesses

The effect of TNCs on local businesses is particularly relevant to dependency interpretations.

If large international corporations weaken existing local economic activity, then growth in TNC-led production may not translate into equally strong independent local development.

The chain may be:

large international corporation enters economy → local businesses face stronger competition → local production or employment is weakened → economic dependence on TNC activity increases

This provides a direct challenge to the claim that all foreign investment necessarily strengthens development.

Dependency theory and corporate mobility

The ability of TNCs to move operations between societies may also support a dependency interpretation.

If local employment depends heavily on the decisions of a corporation whose operations are internationally mobile, economic opportunities may remain vulnerable to decisions made beyond the local society.

AQA's material on the transnational capitalist class recognises this ability to move operations internationally in search of profit.

This does not prove that TNCs always cause underdevelopment, but it demonstrates why dependency theorists focus on power relationships.

Modernisation and dependency compared

Modernisation interpretation	Dependency interpretation
TNC investment can encourage industrialisation.	TNC involvement may create unequal economic relationships.
Employment can increase income and economic opportunities.	Employment may depend on decisions made by internationally mobile corporations.
Training can improve skills and human capital.	Benefits may be limited or unevenly distributed.
Foreign investment can contribute to economic growth.	Growth led by external corporations may weaken local economic independence.
TNCs can help societies participate in global economic activity.	The size and power of TNCs may reproduce global inequalities.

TNCs and development strategies

A development strategy is an approach intended to encourage development.

The AQA specification does not require TNCs to be treated as a single separate strategy. Instead, it requires students to understand their role in local and global strategies for development.

This means TNC activity can form part of strategies based on:

• investment

• industrialisation

• employment

• participation in global economic activity

The significance of TNCs therefore overlaps with later study of trade and industrialisation [Trade and industrialisation].

Development strategies based on investment

One development approach may involve using outside investment to expand economic activity.

TNCs can provide capital that contributes to production and industrialisation.

Potential advantages include:

• quicker expansion of economic activity

• new employment

• access to training and skills

• opportunities for industrial development

However, the success of such a strategy depends on whether the benefits become embedded in the local economy.

Evaluating an investment-led strategy

A strong answer should ask:

What remains locally if TNC activity changes or moves?

Relevant issues include:

• whether workers have gained transferable skills

• whether local businesses have developed

• whether employment is secure

• whether economic activity is capital intensive

• whether environmental costs have resulted

These questions turn a descriptive account of TNC investment into sociological evaluation.

TNCs and the environment

TNCs may also have significant environmental effects.

AQA's 2024 Paper 2 directly asked students to analyse two ways TNCs may harm the environment. The item focused on TNCs' use of raw materials and resources and the effects of products after sale.

The mark scheme identifies several possible environmental consequences, including:

• pollution caused by extraction of raw materials

• waste from products

• electronic waste

• plastics that are difficult to recycle or dispose of

• contribution to global heating

Environmental effects are examined in more detail in urbanisation and the environment [Urbanisation and the environment].

Extraction of raw materials

Many forms of production require natural resources.

AQA's 2024 mark scheme recognises mining for raw materials as one way TNC activity can cause pollution.

The chain is:

TNC production requires resources → extraction of raw materials → environmental pollution or damage

This demonstrates why economic development and environmental sustainability can come into conflict.

Deforestation and exploitation of resources

The 2024 examiner report states that students commonly discussed:

• pollution

• deforestation

• exploitation of raw materials

when analysing the environmental effects of TNCs.

The important exam skill is to use these as examples of a general sociological point, rather than simply listing environmental problems.

For instance:

Weak:"TNCs cause deforestation."

Better:"TNC production may require natural resources or land. Extracting these resources can contribute to deforestation, meaning economic activity associated with development may also produce environmental damage."

Waste from TNC products

Environmental effects can continue after production.

AQA's 2024 item noted that TNCs may not be concerned with what happens to goods after they have been sold.

The mark scheme identifies waste including:

• electronic waste

• plastics

that may be difficult to recycle or dispose of.

A possible chain is:

large-scale production → widespread consumption → discarded products → waste and disposal problems

This broadens analysis beyond the environmental impact of factories themselves.

TNC production and global heating

AQA's 2024 mark scheme also recognises the contribution of production by TNCs to global heating.

This demonstrates that TNC effects can operate at both:

• local level, through pollution or resource extraction

• global level, through wider environmental consequences

This directly supports the specification requirement to consider the role of TNCs within local and global development strategies.

Development versus environmental sustainability

The environmental debate reveals a central tension.

TNC activity may generate:

• investment

• employment

• industrial production

while also contributing to:

• pollution

• resource depletion

• waste

• global heating

A development judgement therefore depends partly on whether environmental sustainability is included within the definition of development.

AQA's assessments explicitly recognise sustainability as a wider dimension of development.

Economic growth is not the whole of development

Suppose a TNC increases industrial production and national income.

This may indicate economic development.

However, if the same activity:

• causes serious pollution

• damages natural resources

• creates relatively little employment

• weakens local businesses

then the overall judgement is less straightforward.

This builds on development and underdevelopment [Development and underdevelopment], where development is understood as broader than economic growth alone.

The cultural impact of TNCs

AQA's specimen mark scheme also identifies the cultural impact of transnational corporations as relevant knowledge.

Because TNC products and businesses operate internationally, they can contribute to the spread of common products and consumer practices.

AQA's 2025 examiner report noted that successful answers about globalisation and popular culture often connected concepts such as homogenisation and cultural imperialism with the role of TNCs.

This shows that the influence of TNCs is not necessarily limited to economics.

Their cultural role was examined in globalisation and cultural relationships [Globalisation and cultural relationships].

The political context of TNC activity

AQA's specimen mark scheme identifies the legislative, political and industrial relations frameworks of developing countries as relevant when assessing TNCs.

This means TNC employment does not occur in a social vacuum.

Its consequences can depend on the context in which the corporation operates, including arrangements governing employment and industrial relations.

This is a useful evaluation point because the same type of corporation may not produce identical outcomes in every society.

Pay and employment policies

AQA also specifically recognises pay and employment policies in developing countries as relevant to TNC impacts.

Therefore, when evaluating employment creation, consider more than the number of jobs.

Ask:

• What are the employment conditions?

• How secure is the work?

• What opportunities for training exist?

• Who gains access to the jobs?

• How do the jobs compare with existing opportunities?

This creates a much stronger sociological analysis.

The effect of TNCs is context dependent

The source material supports both positive and negative effects.

This means it is inaccurate to claim that TNCs always:

• promote development

• exploit developing societies

• create secure jobs

• harm local businesses

• damage the environment

The more defensible argument is that their effects depend on the form of TNC activity and the local context.

A useful evaluation framework

When evaluating a TNC, consider five questions.

1. Investment

Does the TNC bring capital and economic activity?

2. Employment

How many jobs are created, and what type of employment is provided?

3. Skills

Do workers receive training or opportunities for career development?

4. Local economy

What happens to existing businesses and employment?

5. Environment

What are the environmental costs of extraction, production and consumption?

A strong essay weighs these areas together instead of reaching a judgement from one consequence alone.

Local benefits versus global corporate power

TNCs illustrate the tension between local benefits and global power.

At a local level, workers may gain:

• jobs

• wages

• training

At a global level, the corporation itself may remain able to make decisions across several societies and move operations.

This is why modernisation and dependency approaches can interpret the same activity differently.

The same evidence, different interpretation

Consider the statement:

A TNC invests capital and opens a production facility in a developing society.

A modernisation interpretation may emphasise:

investment → industrialisation → employment → skills → development

A dependency interpretation may ask:

who controls the investment → what happens to local businesses → how dependent is employment on the TNC → who has the greatest economic power?

Neither approach simply describes the factory.

They interpret its sociological significance differently.

TNCs and global inequality

TNCs may also affect global inequality.

If investment, employment and skills enable poorer societies to develop economically, TNC activity could contribute to narrowing some inequalities between societies.

However, if benefits are uneven or local economies become dependent on internationally mobile corporations, dependency theorists may argue that unequal relationships are being reproduced.

This connects directly with global inequality [Global inequality].

TNCs and the transnational capitalist class

AQA's Stratification and Differentiation content also identifies the transnational capitalist class, including owners and controllers of TNCs.

The idea draws attention to people with economic power whose interests and activities operate across national boundaries.

AQA's 2023 mark scheme recognises that:

• TNCs may create opportunities

• the global super-rich may widen inequality

• TNCs may move or outsource work between societies

For Global Development, the useful connection is that TNC decisions are made within structures of global economic power.

TNCs can create winners and losers

The same corporate decision can affect different groups differently.

For example:

production moves into a developing society

Possible winners:

• people gaining new employment

• workers receiving training

• people gaining career opportunities

Possible costs:

• local businesses facing greater competition

• environmental damage

• greater dependence on the corporation

Meanwhile, movement of production may also affect workers elsewhere.

TNCs therefore demonstrate how globalisation can redistribute economic opportunities rather than simply increasing them everywhere.

Comparing positive and critical interpretations

Argument that TNCs promote development	Critical argument
Bring foreign direct investment.	Investment does not guarantee widespread local benefits.
Create employment.	Some production is capital intensive and creates relatively few jobs.
Provide training and skills.	Opportunities may not be equally available to all workers.
Can increase women's access to paid work.	Employment does not automatically eliminate gender inequality.
Encourage industrialisation.	Existing local businesses and employment may be affected.
Contribute to economic growth.	Economic growth is only one dimension of development.
Connect societies with global economic activity.	Their size and mobility may create unequal power relationships.
Produce goods and economic activity.	Resource extraction, pollution, waste and global heating may create environmental costs.

How to reach a balanced judgement

Avoid a conclusion such as:

"TNCs are good because they create jobs."

It ignores the other evidence.

Also avoid:

"TNCs are bad because they damage the environment."

That ignores the possible economic benefits.

A better judgement weighs:

economic benefits + employment and skills + local economic effects + global power + environmental costs

You can then decide the conditions under which TNC involvement is more or less likely to support development.

TNCs alongside other development organisations

TNCs are only one of the organisations AQA requires students to study.

The specification also requires:

• non-governmental organisations [Non-governmental organisations]

• international agencies [International agencies]

These organisations may have different purposes, resources and relationships with local communities.

Understanding TNCs first provides a useful comparison because TNCs are primarily economic corporations operating across national boundaries.

TNCs and later development strategies

The role of TNCs also overlaps with later topics.

Their activities can connect to:

• aid and development [Aid and development]

• trade and industrialisation [Trade and industrialisation]

• urbanisation and the environment [Urbanisation and the environment]

• employment and education [Employment and education]

This illustrates why Global Development questions can require students to combine knowledge from different parts of the topic.

Building an analytical chain in an exam

For employment:

TNC investment → new workplace → employment → wages and training → improved economic opportunities → possible development

Then evaluate:

but capital-intensive production → fewer workers required → limited employment effect

For local businesses:

TNC expansion → greater competition → local businesses lose activity → local job losses → benefits of TNC employment partly offset

For the environment:

demand for raw materials → extraction → pollution or deforestation → environmental damage → limits to sustainable development

For power:

large global corporation → ability to locate operations internationally → local dependence on investment decisions → unequal economic power

Each chain takes you from description to analysis.

Overall sociological judgement

TNCs can play a significant role in development because they connect capital, production and employment across societies.

Their potential benefits include:

• foreign investment

• industrialisation

• employment

• training

• skills

• career opportunities

• women's participation in paid work

However, AQA material also identifies important limitations:

• capital-intensive production

• effects on local businesses

• corporate size and power

• internationally mobile operations

• environmental pollution

• resource exploitation

• waste

• global heating

The most convincing judgement is therefore conditional. TNC activity can contribute to development, but investment alone is not sufficient evidence of successful development. Its significance depends on the quality and distribution of employment, the development of local skills and businesses, the power relationships involved and the environmental consequences.

Key Words 🔑

Key word	Student-friendly definition	How it may be used in an exam
Transnational corporation (TNC)	A corporation whose activities operate across national boundaries.	Define the organisation before explaining its role in development.
Foreign direct investment	Capital invested by a business in economic activity in another society.	Explain how TNCs may provide resources for production and industrialisation.
Industrialisation	Growth of industrial forms of production and employment.	Link TNC investment with changes in economic structure and employment.
Skills transfer	Development of workers' knowledge and skills through training and employment.	Explain one potential development benefit of TNC activity.
Capital intensive	Economic activity relying heavily on capital, machinery or technology rather than large quantities of labour.	Evaluate the claim that large TNC investment necessarily creates large numbers of jobs.
Local business	A business operating within the local economy affected by TNC activity.	Analyse how TNC competition may alter employment and economic development.
Modernisation theory	An explanation that emphasises economic and social transformation, including industrialisation, as part of development.	Support arguments that TNC investment may promote development.
Dependency theory	An explanation that sees underdevelopment as connected to unequal relationships between societies.	Evaluate the power of TNCs and dependence on foreign investment.
Global heating	The long-term rise in global temperatures associated with environmental change.	Analyse environmental consequences of TNC production.
Sustainability	Development that takes account of environmental consequences and future needs.	Evaluate whether economic benefits from TNCs represent wider development.

Hints from the Examiner Reports 💡

Examiner hint: Start with the general sociological point, then add an example. In the 2024 TNC question, answers were often too example driven. The examiner report advises making the general point first rather than allowing an example of a corporation to become the whole answer.

Examiner hint: Use the item hooks explicitly in 10-mark analyse questions. In 2024, some students discussing TNCs and the environment did not use the hooks about raw materials and what happens to products after sale, so they could not demonstrate the required application fully.

Examiner hint: Pollution, deforestation and exploitation of raw materials were common relevant ideas in the 2024 TNC question, but the strongest answers needed to develop how the TNC activity produced the environmental consequence rather than simply name an environmental problem.

Examiner hint: In 10-mark questions, two well-developed points are more effective than several brief ones. AQA advises making the two answers clearly identifiable and states that introductions and conclusions are unnecessary for these questions.

Examiner hint: Theory can help you develop an answer, but only when it stays focused on the question. The 2024 Global Development report noted that modernisation and dependency perspectives sometimes helped students develop their analysis of industrialisation and employment.

Examiner hint: For 20-mark evaluation, avoid simply placing one perspective after another. AQA's examiner guidance stresses that effective evaluation weighs strengths and limitations and reaches a reasoned judgement, while brief essay planning can improve structure and coherence.

Common Mistakes ⚠️

Mistake: Assuming every TNC creates large numbers of jobs

Why this is incorrect: AQA identifies the capital-intensive nature of some TNC activity as an important analytical issue.

How to improve: Distinguish between investment, production and employment. A large amount of investment may still produce relatively few jobs if production relies heavily on machinery and technology.

Mistake: Saying that foreign investment automatically equals development

Why this is incorrect: Foreign direct investment may increase economic activity, but development also depends on its effects on employment, skills, local businesses and the environment.

How to improve: After identifying investment, ask what consequences follow from it and who benefits.

Mistake: Treating all TNC employment as identical

Why this is incorrect: The AQA specimen mark scheme identifies pay and employment policies, training, gender patterns and political or industrial relations frameworks as relevant.

How to improve: Evaluate the quality and distribution of employment, not just whether jobs exist.

Mistake: Ignoring local businesses

Why this is incorrect: TNC investment can affect employment indirectly through its impact on existing local businesses.

How to improve: Consider both jobs created by the TNC and possible changes to employment elsewhere in the local economy.

Mistake: Assuming industrialisation is always beneficial

Why this is incorrect: Industrialisation can create formal employment and training opportunities, but it can also replace existing work patterns and have environmental consequences.

How to improve: Evaluate industrialisation through employment, distribution of benefits and sustainability.

Mistake: Listing environmental damage without explaining it

Why this is incorrect: Writing "pollution, deforestation and global heating" is descriptive rather than analytical.

How to improve: Construct a chain such as:

TNC needs raw materials → extraction increases → land or water is damaged → development becomes less environmentally sustainable

Mistake: Confusing modernisation and dependency theory

Why this is incorrect: They interpret TNC involvement differently.

How to improve: Remember the core contrast:

Modernisation: TNC investment may provide resources for industrialisation and development.

Dependency: TNC power may reproduce unequal economic relationships and dependence.

Mistake: Assuming TNCs must either help or harm development

Why this is incorrect: The source material supports both positive and negative effects.

How to improve: Reach a conditional judgement. Ask which effects, for which groups, under what circumstances?

Exam-Style Questions ✍️

Question 1

What is meant by a transnational corporation (TNC)? (1 mark)

Question 2

Explain one way in which foreign direct investment by a TNC may contribute to development. (4 marks)

Question 3

Explain two ways in which TNCs may change patterns of employment in developing societies. (6 marks)

Question 4

Outline and explain two ways in which transnational corporations may affect employment in developing countries. (10 marks)

Question 5

Outline and explain two ways in which TNCs may affect local economic development. (10 marks)

Question 6

Read Item A and answer the question that follows.

Item A

A transnational corporation invests capital in a developing society and establishes a new production facility. The facility provides training for some of its workers. However, production relies heavily on machinery and the corporation competes with existing local businesses.

Applying material from Item A, analyse two ways in which the activities of the TNC may affect development. (10 marks)

Question 7

Read Item B and answer the question that follows.

Item B

Transnational corporations need natural resources to produce goods on a large scale. Their production may create economic growth and employment, but extracting resources and disposing of products may have environmental consequences.

Applying material from Item B, analyse two ways in which TNC activity may affect sustainable development. (10 marks)

Question 8

Read Item C and answer the question that follows.

Item C

Some sociologists argue that transnational corporations contribute to development by bringing investment, industrial employment and opportunities for workers to gain skills.

Other sociologists argue that TNCs are powerful global organisations whose activities may create dependence, weaken local businesses and produce environmental costs.

Applying material from Item C and your knowledge, evaluate the view that transnational corporations promote development. (20 marks)

Answers and mark scheme

Question 1

Answer: A corporation whose activities operate across national boundaries. (1 mark)

Award one mark for an accurate definition.

Question 2

Up to 4 marks for a developed explanation.

A strong answer could explain that foreign direct investment provides capital for economic activity. This may enable production to expand, creating employment and contributing to industrialisation and economic growth. These changes may therefore contribute to development.

Credit should depend on explaining the development mechanism, not simply defining investment.

Question 3

Award marks for two developed ways.

Possible content includes:

Factory or formal-sector employment

TNC investment may create more employment in factories, workshops or the formal sector, changing existing patterns of work.

Training and skills

Workers employed by TNCs may receive training, giving them new skills and opportunities for career development.

Other relevant effects may include:

• increased employment for women

• movement away from farming or fishing

• more specialised division of labour

• effects on local businesses and employment

• limited job creation where activity is capital intensive

For higher marks, each effect should be linked clearly to changing employment patterns.

Question 4

A high-level answer should develop two separate ways.

Indicative content may include:

Employment creation

TNCs may establish production in developing societies, creating new jobs. Employment may provide wages and potentially increase workers' economic opportunities.

Training and skills transfer

TNCs may train workers, increasing their skills and creating opportunities for career development.

Other valid ways may include:

• employment of women

• effect on local businesses

• pay and employment policies

• capital-intensive production

• changes in employment structure

Students should analyse each way rather than simply describe TNCs.

Question 5

Possible answers include:

Investment and economic activity

Foreign direct investment may provide capital for production and industrialisation, increasing employment and potentially supporting economic development.

Effects on local businesses

Large TNCs may compete with existing local businesses. If those businesses lose economic activity, local employment may decline, reducing some of the development benefits of TNC investment.

Other relevant answers might develop training, women's employment or capital-intensive production.

Question 6

A strong answer should develop two separate hooks from Item A.

Possible way 1: training

The item states that the TNC provides training. Workers may gain new skills that improve their productivity and future career opportunities. This can contribute to development through increased human capital as well as immediate employment.

Possible way 2: capital-intensive production

The item states that production relies heavily on machinery. Although the TNC brings investment, capital-intensive production may require relatively few workers. The employment effect may therefore be smaller than the level of investment suggests, limiting the extent to which local people benefit.

Alternatively, students could develop the hook concerning competition with local businesses.

Question 7

A high-level response should apply two separate elements of Item B.

Possible way 1: extraction of resources

The item refers to TNCs needing natural resources. Extracting these resources may cause pollution, deforestation or other environmental damage. Therefore, economic growth associated with TNC production may conflict with sustainable development.

Possible way 2: products and waste

Large-scale production can create products that later become waste. AQA recognises examples such as electronic waste and plastics that may be difficult to recycle or dispose of. This creates environmental costs after the original production process has ended.

Students may also analyse the contribution of production to global heating.

Question 8

A strong 20-mark response should directly evaluate whether TNCs promote development.

Arguments supporting the view may include:

• foreign direct investment

• industrialisation

• employment creation

• formal-sector employment

• wages and economic opportunities

• training

• skills transfer

• career development

• social mobility

• women's access to paid employment

• economic growth

Modernisation theory may support the view because:

• TNC investment can contribute to industrialisation

• industrialisation may transform employment

• training and skills may support economic development

• increased production may contribute to economic growth

Arguments challenging the view may include:

• dependency theory

• unequal power between large global corporations and local economies

• the ability of TNCs to move operations internationally

• effects on local businesses

• dependence on outside investment

• capital-intensive production creating relatively few jobs

• variation in pay and employment policies

• environmental pollution

• extraction and exploitation of raw materials

• deforestation

• waste

• global heating

Wider evaluation should consider:

• whether economic growth alone is sufficient evidence of development

• whether employment benefits are widespread

• whether workers gain durable skills

• whether local businesses benefit

• whether women's employment results in wider gender equality

• whether environmental costs make development unsustainable

• whether the local economy remains dependent on decisions made by a mobile global corporation

For the highest level, students should make the perspectives interact rather than writing separate descriptive accounts.

A strong conclusion might argue that TNCs can make an important contribution to development through investment, employment and skills, but their presence alone does not guarantee development. The extent of their contribution depends on whether economic gains are widely distributed, strengthen rather than weaken local economic capacity and are achieved without unacceptable environmental costs.