W14. Economic Globalization / Yeonju Heo

Economic Globalization 

2015048995 Yeonju Heo

This article explains the nature and importance of 'transnational corporation(TNC)' among the discussions on economic globalization. Since the 15th century, the chartered trading companies in Europe have played an important role in the evolution of political economy. Until the late nineteenth century, there were no companies that were manufacturing in countries other than their home countries, but just before World War I, many companies turned into transnational. Over the past 50 years, the number of TNC has increased exponentially in the global economy. It is impossible to quantify how many of them are due to the complex relationship between the companies. They operate throughout the world but are not required to be loyal to certain countries. However, the majority of the world 's 100 largest TNC more than half of their activities in their own countries. Most of the world's TNC originate in developed countries, but the number of multinational corporations originating in developing countries is increasing. The diversity of TNC is increasing.

There are two ways for companies to develop transnational activities. Greenfield investment is building a whole new facility. It becomes the productive stock of both the company and the country in the way that the typical host country prefers. However, this is not the most common way to go overseas. Another way for companies to develop supranational activities is to form strategic alliances with other companies. Strategic alliances focus on specific businesses. Strategic alliances achieve goals that companies can not achieve on their own. Surprisingly, most strategic alliances take place amongst fierce competitors. Many companies form an alliance network that has multilateral relationships and are in a collective competition. Though it is pointed out that competitors can take core technologies, strategic alliances have greatly increased the complexity and diversity of TNC operations in the global economy.

 

Place is a fundamental factor that plays an important role in the way the company produces and behaves. The TNC interacts with local and community characteristics to create unique results. An empirical study of East Asia reveals that Japanese and American electronics companies have different ways of organizing local networks. However, it does not mean that TNC from the same country are the same. Each company has its own corporate culture. On the one hand, the interconnectedness of the global economy is rapidly transmitted across borders. Different business systems undergo a process of converging at a certain level and dividing into different attributes.

 

Just as a company is made up of production and consumption networks, the TNC is made up of dense networks. The network of TNCs comes from interrelationships and is very diverse. TNCs are more difficult to control than regular firms because they are dispersed across societies with different cultures and environments. The TNC has a number of generalizable features that vary from company to company. TNC's headquarters remain in the company's home country. It can be specially produced for regional or national markets, creating a specialized production structure. In addition, the production process is subdivided and each part is placed in a different location.

The geographical range of the TNC's network varies greatly. TNC's regional strategy offers the advantage of efficiency in globalization. While at the same time effectively responding to organizational barriers. Multinational production networks organized on a regional scale are especially present in Europe, North America and East Asia. NAFTA and the EU have helped to rebuild TNC business activities and form a huge network. East Asia does not have a regional political system, such as NAFTA or the EU, but organizes the production network locally.

 

The TNC is one of the main players in the modern world economy. Their importance is growing, and many companies are transnational. The TNC creates tension with other key players in the global economy. They have the potential to capitalize on the differences in resources, costs, and government policies, and to transform interregional operations. The powers of these TNCs have advantages, but they are also very unstable. Thus regulators play a very important role. The country still has important authority over the TNC. This shows that the TNC is powerful but does not possess absolute power.

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As has been the case with various discussions on globalization so far, this article on economic globalization also refers to connectivity and networks. In particular, networks are important in TNCs, which play an important role in economic globalization. 'Transnational corporation'. As the name suggests, TNC, which is a multinational company, establishes its subsidiaries and factories around the world and carries out production and sales activities internationally, the network is bound to play an important role. Although the number of TNCs in developing countries is increasing, it can be inferred that TNC's network is also centered on developed countries, considering that most of the TNCs in the world originate in developed countries. TNCs in developed countries have the advantage that they provide good jobs to workers in developing countries and provide the capital and skills needed for national economic development. However, on the other hand, it can adversely affect the national economy of developing countries by transferring the proceeds from developing countries to their home countries and monopolizing capital. This is not a problem confined to developing countries. It is also a problem that larger TNCs can bring to countries with smaller TNCs or smaller economies of scale. But that does not stop TNC from playing a big role in the global economy. Therefore, as mentioned at the end of the article, the role of the regulatory body is important. But, the TNC, which plays an important role in the global economy, can not stop unconditionally. Therefore, as mentioned at the end of the article, the role of the regulatory agency is important.

Not long ago, the tyranny of famous TNC company A was controversial in Korea. Company A told Korean companies that they would take charge of specific tasks themselves and would not do any other tasks. They would only do the job of making money, and other jobs that does not profit would leave to Korean companies. Korean companies have accepted all of A's needs due to worry about that company A might later offer more adverse conditions. Company A's disregard to Korean companies has been continuing for a long time. Consumers in Korea were constantly dissatisfied with this, but Company A did not respond.

This article stated that the TNC did not possess absolute power. So where is the regulatory agency to block TNC's tyranny? If the country still has the authority to the TNC, the state will be the regulator. But what happens if the state takes the side of TNC? Company A's home country did not make a clear statement on the situation. Perhaps this might not even care. Who will play the role of a regulator in this situation?