W14. Economic globalization/ Jeong Myung Hee

Economic globalization

2015048540 Jeong Myunghee

1. Summary

TNC is the transnational corporation. It has wide view on both the right and left of the political spectrum. The corporation chapter focuses on five related issues. First one is the scale and geographical distribution, and second is why and how corporations engage in transnational activities, third is the geographical embeddedness of transnational corporations. Fourth, the ‘webs of enterprise’ manifested in transnational production networks, fifth, the power relationship between TNCs and other actors in the global economy. Here are details about it.

First, the scale and geographical distribution of transnational corporations. Interests and activities located outside their home country was part and parcel of the early development of an international economy. They created vast business empires at a world scale. However, the first firms to engage in manufacturing production outside their home country did not emerge until the second half of the nineteenth century. Most of world gross domestic product is generated by a much smaller number of very large TNCs. These are what have come to be called global corporations.

TNC activity is conventionally measured using statistics on foreign direct investment. It is an investment by one firm in another with the intention of gaining control over that firm’s operations. The number of TNCs originating from the leading developing countries is undoubtedly growing, by increasing diversity.

Why (and how) Firms ‘Transnationalize’

It is because market-oriented investment and asset-oriented investment that the reason why business firms extend their operations outside their home countries. Market oriented business means that both size and the particular characteristics of markets continue to influence the locational decisions of TNCs. And asset-oriented investment is the attraction of cheap labour that was the primary attraction for firms in certain industries.

Geography Matters : The embeddedness of transnational corporations

Place and geography still matter fundamentally in the ways in which firms are produced and in how they behave. Despite the unquestioned geographical transformations of the world economy, dfriven at least in part by the expansionary activities of transnational corporations. It related at least in part to the palce-specific contexts in which firms evolve, continues to be the norms.

Webs of Enterprise

It is inadequate to conceive of such organizations as being, in some way, free-standing, clearly bounded, independent entities. By the nature of their dispersed geographical spread across political, cultural and social environment. As a number of recent events demonstrate, TNCs may be constrained in their freedom of action. TNCs may be powerful but they do not possess absolute power.

2. Interesting Point

I felt closed with TNC such as Pepsi, Coca-cola, IBM etc. However, I have never thought it seriously. After reading this article, I started to think it critically. One of them is concern about labor. It can make unemployment serious especially in developing country. TNC can be obstacle for economic independence. Because it intervened political issues in developing country. For example, ITT intervene in Chile’s political issues.

3. Discussion point

I wonder what can they or we do for solving above problem. Is it more good than harm in developing country? We have to think about it. I think there are clear benefits. However, to get benefits, they have things to give up in developing country. So it is important balancing between country and TNC.