Economic Globalization

 

 

Economic Globalization

 

 

INTRODUCTION

We increasingly live in a world of global corporations. specifically the transnational corporation (TNC). The chapter focuses on five related issues. ①the scale and geographical distribution of TNCs in the global economy ②why and how corporations engage in transnational activities ③the geographical embeddedness of transnational corporations ④the ‘webs of enterprise’ manifested in transnational production networks ⑤the power relationships between TNCs and other actors in the global economy.

 

 

THE SCALE AND GEOGRAPHICAL DISTRIBUTION OF TRANSNATIONAL CORPORATIONS

The chartered trading companies, which emerged in Europe from the fifteenth century onwards played extremely important roles in the evolution of an increasingly interconnected political economy. TNCs is more powerful than many nation-states. Very few of even the 100 leading TNCs can be regarded as ‘global’ corporations in terms of their geographical extent. The vast majority of the world’s leading 100 TNCs still retain more than half of their activities in their home country. The vast majority of the world’s TNCs originate from the developed economies. There is an increasing diversity of TNCs in the global economy.

 

WHY (AND HOW) FIRMS ‘TRANSNATIONALIZE’

The reasons why business firms extend their operations outside their home countries, and how they do that, are complex. there are two broad categories.

that is market-oriented investment and asset-oriented investment.

in market-oriented investment, both the size and the particular characteristics of markets continue to influence the locational decisions of TNCs.

and, in asset-oriented investment, It say that natural resource-oriented investment has a very long history. However, developments in transportation and communications technologies, as well as in production process technologies, have increased the ability of firms to access other unevenly distributed assets on increasingly wide geographical scales.

 

 

There are two major ways in which firms develop transnational activities.

One is through what is known as ‘greenfield’ investment, the other is through engagement with other firms, through either merger and acquisition or some form of strategic collaboration. Greenfield investment mean simply the building of totally new facilities.

 

GEOGRAPHY MATTERS: THE EMBEDDEDNESS OF TRANSNATIONAL CORPORATIONS

This reading show that empirical research in East Asia shows how Japanese and US electronics firms have distinctively different ways of organizing their regional production networks, Even countries with rather similar characteristics, such as South Korea and Taiwan, have produced distinctively different forms of business organization. Through this examples of nations, we can know a litter about geography matters. Hence, despite the unquestioned geographical transformations of the world economy, we are not witnessing the convergence of business-organizational forms towards a single ‘placeless’ type.

Yet, it would be extremely surprising if the distinctive nature of nationally based TNCs were to be replaced by a standardized, homogeneous form.

 

 

‘WEBS OF ENTERPRISE’: TRANSNATIONAL PRODUCTION NETWORKS

Although the focus of this chapter is on ‘corporations’, it is inadequate to conceive of such organizations like ‘free-standing’. On the contrary, all business firms are constituted and embedded within, highly complex and dynamic networks of production, distribution and consumption. Such networks have become increasingly extensive geographically and controlled. TNCs can best be considered as ‘a dense network at the centre of a web of relationships’.

I think that Network is important to TNCs. globalization is extended through network.

A few generalizations can be made. Characteristically, the corporate headquarters of TNCs invariably remain in the firm’s home country.

Core R&D facilities also still tend to remain in the home country although some kinds of R&D have become increasingly dispersed.

 

A number of geographical configurations of TNC production activities are apparent. One option is to concentrate production at a single location. A second option is to produce specifically for a local/national market. A third option is to create a structure of specialized production for a regional market. A fourth possibility is to segment the production process and to locate each part in different locations. 

 

more companies are becoming transnational at an earlier stage of their development. TNCs are a far more diverse population than is often recognized. but, Not all are ‘global’ corporations. Indeed, very few are. TNCs come in a whole variety of shapes and sizes and there remain significant differences between TNCs from different countries of origin.

 

This chapter finished as this reading say “TNCs may be powerful but they do not possess absolute power.”

 

 

Through this chapter, I learned about TNCs. TNCs is centered in economic globalization. TNCs already exist many nations such as mcdonalds, starbucks, etc.

we have been globalization through these.

Through this examples, we can know that TNCs is essential to economic globalization. but, TNCs doing good role have disadvantage.

So, I want to know more concretely about advantages and disadvantages of TNCs