Reading 4 – Economic Globalizations. 

Summary: 

The purpose of this chapter is to provide a more nuanced depiction and explanation of the nature and significance of TNCs in the processes of economic globalization. According to the author, transnational corporation (TNCs) has a big influence on economic globalization. The chapter focuses on five related issues: (1) the scale and geographical distribution of TNCs in the global economy; (2) why and how corporations engage in transnational activities; (3) the geographical embeddedness of transnational corporations; (4) the ‘webs of enterprise’ manifested in transnational production networks; (5) the power relationships between TNCs and other actors in the global economy. 

1) the scale and geographical distribution of TNCs in the global economy 

Big companies from western countries move their factories to third-world countries because it is cheaper to produce. This delocalization is a form of economic globalization. 

2) why and how corporations engage in transnational activities 

Corporations engage in transnational activities because they want to reach the overseas market for new consumers or because the production in another country is cheaper. 

3) the geographical embeddedness of transnational corporations 

Contrary to much of the received wisdom on the global economy, place and geography still matter fundamentally in the ways in which firms are produced and in how they behave. 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. TNCs, therefore, are ‘bearers’ of such characteristics, which then interact with the place-specific characteristics of the countries and communities in which they operate to produce a set of distinctive outcomes. 

4) the ‘webs of enterprise’ manifested in transnational production networks 

Because of the WEB, TNCs can take a step further into the networks of production, distribution, and consumption. 

5) the power relationships between TNCs and other actors in the global economy. 

Today's global economy is dominated by transnational corporations, which are also the main actors of global economic activity.  The rapid growth of transnational corporations, which has been the result of the globalization of production and capital, not only enhances their standing and significance in the global economy, but also deepens the globalization of production, strengthening the international economy, and the progress of economic globalization in terms of trade, investment, finance, technology development, and other aspects. It has benefited the development of the global economy and the process of economic globalization. 

Interesting point 

It is crazy you will think because the big companies move their factories to a third-world country there will be more work and the economy will grow and it will benefit the country, but this is not true at all. 

Discussion point 

what are the things a company can do to contribute to the growth of the economy more?

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