Reading4: Economic Globalization

 Summary

  The development of economic globalisation has led to an overlap of interests between countries, so that national interests are no longer completely exclusive and must be considered in their international dimension. However, in the process of economic globalisation, the state does not always benefit. There is an inherent contradiction between national interests and a high degree of economic globalisation due to the existence of the "impossibility triangle" of the global economy. The relationship between multinational companies and their home and host countries is characterised by both conflict and cooperation. MNCs are important engines for the development of the economy and strength of the home country, but with the process of economic globalisation, the business activities of MNCs are no longer fully in line with the interests of the home country, although there are also overlapping and contradictory interests between MNCs and the host country. In order to maintain the national interests, the home country and the host country will formulate corresponding policies to guide and regulate the investment and operation activities of multinational corporations according to their interests, so as to avoid the negative impact of the operational activities of multinational corporations on the country. On the other hand, MNCs hope to get as much "freedom" as possible, to reduce the hindrance brought by national control to the business. Multinational companies promote the formation and development of global industrial chains and make an important contribution to international trade, but the capital flows and trade differences they cause can lead to economic and trade frictions between countries. Sometimes there are deeper political reasons behind economic and trade frictions between countries than just economic reasons, such as competition between major powers. In such conflicting relationships between home and host countries, multinational companies are also important influences or affected parties. By means of game theory, this paper analyses the possibility of cooperation between countries, while multinational companies, as the link between home and host countries, also play an important dynamic role in reconciling the conflicts between countries.

Interesting point

  Most of the benefits of globalisation have flowed to developed countries. Some of the less profitable industries will go to developing countries where labour costs are low. But it also brings development opportunities to developing countries.

Question

Can developing countries benefit from globalization and become knowledge-based industrial nations?

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