Reading Assignment 4: Economic Globalization -- LI MINHUI

Economic Globalization:Corporations
Peter Dicken

1) Summary:
  The author's starting point for this article is the transnational corporations among business firms that play a central role in economic globalization. The analysis is carried out through five issues related to multinational corporations.
  For multinational corporations the interests and activities of firms located outside their home countries were an important part of the early development of the international economy. The business of multinational corporations can be classified into two categories, market-oriented investment and asset-oriented investment. Most investments are market-oriented, and the size and characteristics of markets continue to influence the location decisions of multinational companies.The asset-oriented investment is to select the location according to the main resources needed by the company's business. Therefore, transnational investment has led to the globalization of resource allocation, making world production proceed under the most reasonable location layout. The strong economic benefits of multinational corporations' investment has accelerated the economic opening of underdeveloped countries, and promoted the opening of these countries to the outside world with great attractiveness, and entered the world economic system.
  Building an entirely new large-scale facility for a multinational corporation is an adventure. For this reason, companies prefer to establish overseas operations through partnerships with existing companies, sharing the risk. Indigenous cognitive, cultural, social, political and economic characteristics play a leading role in the process of transnational corporation embedding. The production network of multinational corporations is in a state of constant change in the process of continuous participation, reorganization and rationalization.
  Multinational corporations have become the organizers of global production and the main participants in the international flow of goods, technology and capital. With the rapid increase in the number of multinational companies, these multinational companies are economic entities integrating production, trade, investment, finance, technology development and transfer, and other services, and implement economic globalization business strategies to combine production factors across national and regional boundaries , has become the main driving force for the accelerated process of economic globalization.

2) Interesting point:
  The authors mention that from the perspective of multinational corporations, regional strategies may be an ideal solution to the competitive pressures of organizational responsiveness and global integration. Simple geographic proximity is a powerful motivator for consolidating operations, and a regional strategy offers many of the efficiency advantages of globalization while addressing some of the barriers that globalization presents. From this we can better understand the significance of the European Union and other similar organizations.

3) Discussion point:
  Advocates of MNC alliances argue that firms can cooperate to achieve mutual benefit and combine their capabilities. Critics see the risk of ceding key technologies to rivals. So in the face of such complexity and diversity, how should multinational companies balance it?

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