Economic Globalization

1.     Summary

The modern definition of TNC are incorporated or unincorporated enterprises comprising parent enterprises and their foreign affiliates. A parent enterprise is defined as an enterprise that controls assets of other entities in countries other than its home country, usually by owning a certain equity capital stake.TNC appears in fifteen century in Europe, after world TNC has grown dramatically. Firms like General Motors, IBM, Toyota, are the most prevelant form of TNC.

TNC activitiy can be measured statistically by using FDI(Foreign Direct Investment) FDI has grown consistently two and ten times more than 1986. Currently, one third of the world total FDI accounts in developing countries like East Asia. FDI is significant in Asia, but it is not preferable opinion. There are some reasons for transforming coporations into TNC .The size and own characeristics of company have a influence on the locational decisions of TNC. The geographical unevenness is the main factor of why firms involved in transnational investments. Some assets like human resources are unevenly distributed and it is a vital source in transnational investment.

There are two ways in which firms develop transnational activities. One is a greenfield investment and the other is merge and acquisition form of investment. Greenfield investment establishing totally new facilities is the most preferable type of investment by host countries , because it produces stocks in firm and countries efficiently. Merge and acquisition type of investment seems more practical rather than greenfield investment. Another strategy is collaborating with one and or more firms. They are gaining economic power and adding a new component called collective competition

The establishment of the NAFTA is leading to a reform of corporate activities and networks organized at the regional scale are apparent in most parts of the world. EU also has made considerable reorganization of existing corporate networks by existing and new TNCs.. WTO is also influence on transnational networks as a regulation. we need to avoid the simplistic view that TNCs always prevail. it doesn’t posess absolute power.

2. Interesting

I knew the many forms of TNC corporations and many agreements like FTA and TNCP has a significant role in increasing or decreasing the TNCs. TNCs is highly involved in human resources. I think those firms have a social resposiability as influcing domestic economy.

  In korea, there was a TNC firms like carrefour mart. French retailer,

since they collapsed the Korean retailer have to send the dismissals of over 1,000 so-called non-regular workers. many people struggled for losing their jobs and their livelihoods was a desperate one for the mainly young women workers involved. 

3.Question

Some retailer is suffering from calls for action against abusive working conditions in foreign plants that produce clothing for them under sub-contracting arrangements, although the retailer has no equity ownership or even foreign presence in the country in which the abusive labor conditions exist. The impact of TNCs on people around the world has grown paradimically as these firms of economic globalization reach into the life of domestic societies through both equity and non-equity mechanisms

 what should determine the appropriate function and limits on TNC responsibility for social conditions around the world?