Economic globalization

1. summary

In article, there are 5 main issues : the scale and geographical distribution of TNCs in the global economy, who and how corporations engage in transnational activities, the geographical embeddedness of transnational corporations, the ‘webs of enterprise’ manifested in transnational production networks, the power relationships between TNCs and other actors in the global economy.

About transnational corporation, since 1914(eve of world war 1), the number of TNCs in the world has grown. Global corporations like General Moters, IBM, Toyota are being more powerful than nation-states. And leading TNCs can be regarded as global corporations in terms of geographical extent. TNCs come in all shapes and sizes from the global corporations operating in scores of countries to TNCs operating in one or two countries outside their home base. And activity of TNC simply measured by FDI. FDI means that direct investment occurs across national boundaries. FDI has many matters in developing countries, but the number of TNCs are still increasing.

Corporations transnationalize because of complex and highly contingent on particular circumstances. Despite TNC develops these days, their investment continues to be market-oriented. And second reason of firms engage in transnational investment is assets that firms need to produce and sell products are also geographically very unevenly distributed.

About geography matters of the embeddedness of transnational firms, TNCs has complex process to embedding in society. The complex process includes some interaction and place-specific characteristics.

In fact, business corporations consists of dynamic networks. These intricate networks being extensive geographically and controlled. But TNCs are more difficult to coordinate and control than firms, And TNC tend to develop distinctive spatial patterns for each functions. Also, TNCs are highly dependent on other firms for many of their needs. For example, TNCs and other firms have relationship of customer and supplier. And the geographical extent of transnational production networks is variable. It means that these variable networks appear ‘global’ truly. In fact, transnational production networks organized at the regional scale.

About TNC network, Europe has some special example. EU has led to reorganization of existing corporate networks and the establishment of pan-EU systems by new TNCs. About TNCs, Pan-EU means that EU trade networks with TNCs in their own right. For example, Ford, the one of famous TNC, established a pan-European structures in 1967.

2. Learned things

Economic globalization deeply related to TNCs. In fact, as ratio of TNCs in world economic market increases, TNCs give much effects to world in aspects of exporting products. I am interested in characters of TNCs. McDonald is one of TNCs, because it matches marketing strategies to culture of nations. When TNCs develop, national corporations are threaten existence.

I am also interested in networks of TNCs. Especially, pan-EU system. Recently, according to newspaper, Germany carries forward some regulation for preventing technology leakages in dimension of pan-EU system. In other words, Germany government wants to establish legal evidence to prevent taking over Germany corporations by Chinese investors. Like this situation, EU member nations present economic global opinions, so that EU enforces activities of pan-EU system. According to article, these activities can establish new networks about TNCs and give effect to TNCs and global economic networks. International institutions like EU can give effects global economic networks deeply.

3. Discussion point

Development and increasing the number of TNCs has both advantage and disadvantage. Advantage is that global economy can develop and world has more complex networks about economic relationships among many kinds of firms. Disadvantage is that small-scale corporations cannot adapt and develop in global economic market. Also, almost TNCs have ethical problems about treatment to employee. I want to discuss about how to solve disadvantages of TNCs.