What Is the relation between economics and globalization?
The article about 'Economic Globalization' written by Peter Dicken breaks a misleading stereotype that global corporations trample largely unhindered across national boundaries, emasculating the autonomy of nationstates. To provide a more nuanced explanation of the nature and significance of TNCs in the processes of economic globalization, the writers deals with five related issues.
The first issue is 'the scale and geographical distribution of TNCs in the global economy.' The transnational corporation (TNC) is the central actor. These corporations called global corporations, the allegedly ‘placeless’ giants, owe no allegiance to any particular country or community. TNC activity is measured using statistics on foreign direct investment(FDI). This is simply direct investment that occurs across national boundaries, that is, when a firm from one country buys a controlling investment in a firm in another country or where a firm sets up a branch or a subsidiary operation in another country.
The second issue is 'why and how corporations engage in transnational activities.' The reasons for TNC activity can be explained with two parts- market-oriented investment and asset-oriented investment. The one reason is related to market-oriented investment. The business firms may have reached saturation point in its domestic market or transportation costs may be excessive so they have to extend their operations outside their home countries to increase profitability. The other reason is for asset-oriented investment. The assets that firms need to produce and sell their products and services are also geographically very unevenly distributed. So TNCs look for cheap labor or well-educated, highly skilled and strongly motivated workers located in ‘quality’ communities.
The firms develop transnational activities through ‘greenfield’ investment, engagement with other firms through either merger and acquisition or some form of strategic collaboration. Greenfield investment far from being the most common mode of overseas expansion is simply the building of totally new facilities. But the firms may well prefer to establish a presence in an overseas location through an involvement with an existing firm. Meanwhile, many firms have preferred to merge with, or to acquire, another firm to expand their presence in a particular overseas location. Another widely used mode of TNC expansion is to enter into a strategic collaboration with one or more other firms. Many companies are forming not just single alliances but networks of alliances, in which relationships between partner firms are increasingly multilateral and polygamous. They cooperates to pursue a specific strategic objective, to enable firms to achieve a specific goal that they cannot achieve on their own. But they remain not only separate but also usually competitors. This transnational activities are adding a collective competition to the economic landscape.
The third issue is 'the geographical embeddedness of transnational corporations.' TNCs have the place-specific characteristics of the countries and communities in which they operate to produce a set of distinctive outcomes. In other words, there is the complexity of the embeddedness process in which both place of origin and the other places in which TNCs operate. Within any national situation there will be distinctive corporate cultures, arising from the firm’s own specific corporate history, which make it behave strategically in particular ways.
The fourth issue is 'the ‘webs of enterprise’ manifested in transnational production networks. TNCs can be considered as ‘a dense network at the centre of a web of relationships’ The corporate headquarters of TNCs invariably remain in the firm’s home country but Some kinds of headquarters functions may well be dispersed to key locations within the firm’s transnational network, TNCs are far more difficult to coordinate and control than firms whose activities are confined to a single national space.
The last issue is 'the power relationships between TNCs and other actors in the global economy.' As you can see, TNCs are constantly engaged in processes of restructuring, reorganization and rationalization. TNC networks are always in a continuous state of flux. Such restructuring and rationalization inevitably causes tensions TNCs and other significant actors like states, local communities, labour, consumers, civil society organizations in the global economy. TNCs have their potential ability to take advantage of geographical differences in the availability and cost of resources and in state policies and to switch and re-switch operations between locations. Among the multiplicity of regulatory institutions, and allowing for the proliferation of international and sub-national bodies, the national state remains especially important. States still have significant power to control access to their territories and to define rules of operation. In other words, TNCs may be constrained in their action.
One of the most exciting things about articles is 'strategic alliances', one of the ways in which multinational companies expand. TNCs expands their multinational presence by strategically partnering with one or more other companies. What is interesting about this approach is that while working together for specific strategic goals, they are also in a competitive relationship. The advantage of this approach is that companies can combine competencies in a way that is mutually beneficial. By gathering resources and capabilities and rationalizing production, synergy effects can be achieved. At the same time, however, there is a risk of losing its core technology from the other partner company in the course of the cooperation because it is in competition. Noteworthy is that despite the drawbacks the proliferation of such alliances has greatly increased the complexity and diversity of TNC operations in the world economy,
Here is one question. It is like being in a dilemma situation that you are in a relationship of cooperation and competition. How can they maintain cooperation without losing their technologies? I am curious about how to provide the company's technology to cooperate and how to solve the security problem, I want to discuss this problem with other students in class. I think it seems to be a very difficult problem.
Finally, the last sentence of this author is impressive. As economic globalization progresses, the impact of multinational corporations is great. There is concern that there is a risk of going beyond the autonomy or control of their state and the country to which it intends to enter, but there are still other international entities that will offset the immense power and power of the multinational corporations and balance the forces among the entities in the world economy.
No comments:
Post a Comment