Reading Assignment 4: Economic Globalization --YE SIQI

Economic Globalization 

-summary

The author discusses and elaborates on the size and geographical distribution of TNCs in the global economy, the reasons and ways in which firms engage in transnational activities, the geographical embedding of TNCs, the "enterprise networks" embodied in transnational production networks, and the links between TNCs and other actors in the global economy.

The development of companies with interests and activities outside their home countries was an integral part of the early development of the international economy.In fact, TNCs vary in form and size, from so-called global companies operating in dozens of countries to TNCs operating in one or two countries away from their home bases.What they have in common is that they operate in different political, social and cultural environments.In general, the activities of TNCs are usually measured using FDI statistics.The very rapid growth of FDI is also a clear indication of the growing importance of TNCs as leading integration forces in the global economy.And the number of multinational corporations is also increasing, and the diversity of multinational corporations in the global economy is increasing.

TNCs expand their operations outside their home countries through both market-oriented and asset-directed investments.There are two main ways in which TNCs carry out their activities across borders: one is through so-called "greenfield" investments; The other is through partnerships with other companies, through mergers and acquisitions or some form of strategic cooperation.Greenfield investments increase the production stock of the company itself and the country/community in which it is located, and are the preferred type of investment in host countries. However, greenfield investment is not the most common overseas expansion model.Building a brand new facility, especially one of a huge scale, is a risky undertaking. Another widely used model of multinational expansion is strategic cooperation with one or more other companies.This way of cooperation can enable enterprises to achieve mutual benefit, greatly increasing the complexity and diversity of multinational companies' operations in the world economy.

From the perspective of geographical embedding of TNCs, all commercial firms and TNCs are "produced" through a complex embedding process in which the cognitive, cultural, social, political and economic characteristics of the domestic base play a leading role.TNCs are therefore the "bearers" of these characteristics, which interact with the specific local characteristics of the countries and communities in which they operate to produce a unique set of outcomes.

All commercial companies are made up of highly complex and dynamic production, distribution and consumption networks and are embedded in them.These networks are becoming more geographically extensive and are largely controlled, or at least coordinated, by TNCs. Thus, like corporations in general, TNCs are best viewed as "dense networks of network centers".The internal networks and external connections of TNCs are configured very differently, and diversity is influenced by the relevant parties.Due to the dispersed geographical distribution of TNCs in different political, cultural and social environments, they need more complex organizational structures. From the perspective of TNCs, regional strategies may be an ideal solution to organizational responses to competitive pressures on capacity and global integration.

The organization and geography of large TNCs and their transnational production networks are very complex and dynamic.Multinationals are restricted in different ways and may be regulated. Tensions inevitably arise between transnational corporations and other important actors in the global economy: States, local communities, labour, consumers, civil society organizations.

-Interesting point

In describing the strategic cooperation between multinational companies and one or more other companies, the author mentions the example of the automotive industry. The analogy of the alliance between the automotive industry gives the reader a better understanding of this aspect and the similar complexity of international relations that exist in all important sectors of the economy.

-Discussion

With the deepening of the globalization process, how should countermeasures be formulated to promote the development of transnational corporations?