economic globalization

1.Summary

-The scale and geographical distribution of TNC

The charted trading companies which emerged in Europe from the fifteenth century onwards played extremely important roles in the evolution of an increasingly interconnected political economy. The first firms to engage in manufacturing production outside their home country did not emerge until the second half of the nineteenth century. The most comprehensive definition of a modern TNC is ‘a firm which has the power to coordinate and control operations in more than one country, even if it does not own them’. In aggregate terms, TNC activity is conventionally measured using statistics on foreign direct Investment.

-Why firms ‘transnational’

The reasons why business firms extend their operations outside their home countries, and how they do that, are complex and highly contingent on particular circumstances. The geographical unevenness of markets is one major set of reasons why firms engage in transnational investment. The second set of reasons derives from the fact that the assets that firms need to produce and sell their products and services are also geographically very unevenly distributed and, therefore, may need to be exploited in situ.

-The geographical embeddedness of transnational corporations

All business firms, including the most geographically extensive TNCs, are produced through an intricate process of embedding in which the cognitive, cultural, social, political and economic characteristics of the national home base play a dominant part. despite the unquestioned geographical transformations of the world economy, driven at least in part by the expansionary activities of transnational corporations, we are not witnessing the convergence of business-organizational forms towards a single ‘placeless’ type. This is because, over time, and under specific circumstances, societies have tended to develop distinctive ways of organizing their economies, even within the broad, apparently unitary, ideology of capitalism.

-Webs of enterprise: transnational production networks

Although the focus of this chapter is on ‘corporations’, it is inadequate to conceive of such organizations as being, in some way, ‘free-standing’, clearly bounded, independent entities. On the contrary, all business firms are constituted as, and embedded within, highly complex and dynamic networks of production, distribution and consumption. Transnational production networks organized at the regional scale are evident in most parts of the world, but most especially in the three ‘triad regions’ of Europe, North America and East Asia.

-The power relationships between TNCs and other actors in the global economy

The basis of TNCs’ power lies in their potential ability to take advantage of geographical differences in the availability and cost of resources and in state policies and to switch and re-switch operations between locations. However, this recognition of TNC power has led to some very shaky generalizations because it does not necessarily mean that TNCs always have the advantage. All transnational production networks are influenced by, and embedded within, multi-scalar regulatory systems. There is a territorial asymmetry between the continuous territories of states and the discontinuous territories of TNCs and this translates into complex bargaining processes in which, contrary to much conventional wisdom, there is no unambiguous and totally predictable outcome.

2.What was interesting

I don’t know about the difference of global corporation and transnational corporation. Transnational corporations come in all shapes and sizes, from the so-called global corporations operating in scores of countries to TNCs operating in only one or two countries outside their home base. What they all have in common is that they operate in different political, social and cultural environments.

3.Discussion point

How much bigger will a transnational corporation?