Reading Assignment 4: Economic and Globalization -CAI YAYU

 A） Summary

The term "economic globalization" was first coined by T. Levy in 1985, but there is still no agreed definition. According to the International Monetary Fund (IMF), "economic globalization refers to the increase in the scale and form of cross-border trade in goods and services and capital flows, as well as the widespread and rapid diffusion of technology that has increased the interdependence of the world's economies".

According to the Organization for Economic Co-operation and Development (OECD), "economic globalization can be seen as a process in which economies, markets, technologies and forms of communication are increasingly global in character and national and local identities are diminishing". To this end, economic globalization can be understood in three ways: firstly, the strengthening of economic ties and the increasing interdependence of countries around the world; secondly, the growing convergence of domestic economic rules; and thirdly, the strengthening of international economic coordination mechanisms, i.e. the increasing role of various multilateral or regional organizations in coordinating and disciplining the world economy. In general, economic globalization refers to the process of mutual integration through division of lab our, trade, investment, transnational corporations and factor flows, based on market economy, advanced technology and productivity, led by developed countries, with maximum profit and economic efficiency as the goal, to achieve division of lab our and collaboration in national markets.

Looking around the world today, the process of economic globalization has accelerated significantly. The worldwide economic and technological exchanges and cooperation are deepening, and the competition of economic globalization has brought profound and extensive influence to all countries in the world. In the competition of economic globalization, multinational corporations with strong competitiveness play a very important role. 

Multinational corporations are an important driving force of economic globalization. Economic globalization is the world's countries to achieve their respective interests, take various ways, beyond the limits of space and society, and constantly in the production, trade, investment, finance and other areas of coordinated understanding and action in the development process. The basic feature of economic globalization is the universalization of economic and social ties and competition among countries and the diversification of their methods. Economic globalization is a major change that has shaken many areas of international society and has brought about profound changes in the concept, manner and space of contemporary human economic life. Analyzing and studying the development process of economic globalization, multinational corporations have always played an important role in promoting it.

 B) Interesting point

 Multinational companies are organized differently because of their political and cultural differences, etc. Different regions are responsible for different matters to create maximum benefits for the company. The headquarters parent company will give the task allocation, the core technology is held by the parent company, and the subsidiaries are mainly responsible for the local market. Multinational companies are created by non-stop restructuring, adjusting changes.　

Practice shows that with the development of the world economy and scientific and technological progress, the multinational corporations of various countries continue to generate, develop and grow, and increasingly become the core and leading countries and even the world economic development. The competition among multinational corporations has become an important aspect of economic globalization competition. Powerful multinational corporations and their increasingly fierce competition is the most active, direct and important driving force of the process of economic globalization.

Multinational companies to promote the intrinsic motivation of economic globalization. Examining some famous multinational companies, we can find: in the participation of international economic competition, some multinational companies not only accumulated their economic strength, the formation of their own corporate brand, but also cultivated and forged corporate values. Corporate values are the precursor of business behavior, is an important ideological basis for corporate development strategy and business philosophy. Although the values of many multinational companies are summarized and expressed differently, but the core is: all for the pursuit of profit maximization. A famous multinational company put "the pursuit of growth, never say enough" as a vivid summary of corporate values. It is under the impetus of this corporate value, multinational companies in the non-stop pursuit of enterprise development and growth at the same time, actively participate in and unremittingly promote the process of economic globalization.

In the environment of economic globalization, the rising power and status of multinational corporations and their possession and control of wealth and resources have enabled multinational corporations to stand alongside state authority in determining who benefits, resulting in the economic and even political transfer of some power from territorial states to non-territorial multinational corporations, thus having a very significant impact on the world landscape. The shift of economic power from the territorial state to the world market has been further exacerbated by the emergence of important trends such as the production of new types of investments and services represented by multinational corporations and the transformation of manufacturing into services. In this process, multinational companies from developed countries undoubtedly occupy a pivotal position.

C) Discussion point

Will economic globalization lead to economic crisis?