Relation between economy and globalization

Economic globalization is not a new concept but has been constantly developing for at least a thousand years. But this has changed drastically since the beginning of the 20th century. 

Major corporations have started expanding their labour over different countries. These corporations are called Transnational Corporations (TNC).

Their motivation for these decisions varies over the nature of their corporation, but it can be summarized in two broad categories: market-oriented investment and asset-oriented investment.

To explain market-oriented investment simply, a TNC can reach their limit and must expand to foreign countries to keep growing their profit.

While asset-oriented investment is more focused on the geographical unevenness of the market. 

Many TNC’s started out in the natural resource sector as well as energy and industrial sectors.

Except for industries where expertise and skill are necessary, the main driving force for these corporations were low labour cost.

However, TNCs are far more difficult to coordinate and control due to the geographical dispersion of their activities. 

 

This kind of globalization has many advantages for not only first world countries but also developing nations as they can profit from the work opportunity created by corporations.

 

Interesting point

 

In the past century economic globalization has been growing at rapid speed with countries growing from famine or starvation to one of the most important trading partners for example China.

Nowadays you won’t see many products that are produced in your home country or receive support for software from people in other countries.

 

Discussion point

 

Will economic globalization will also mean that trading between countries becomes cheaper and less complicated?

Comments

Post a Comment

Popular posts from this blog

[Hofstede's dimensions] Comparing South Korea, China & Japan

Image
   I compared Korea, China, and Japan using Hofstede's dimension. What are the cultural measures of neighboring countries with similar cultures? [Masculinity]  Japan's index was the highest with 95 points. I think this is related to the indicator of individualism. In the case of individual-centered Japan, not group-centered, it focuses on individual performance and shows a strong preference for achievement or success. Therefore, I think a high number came out of Masculinity. On the other hand, in Korea, efforts are made to reduce unnecessary conflicts and maintaining relationships is important. Therefore, I think it shows a relatively low score in Masculinity. [Long Term Orientation]   The reason why Korea scored 100 points in terms of long-term orientation is that Korea is such a practical and long-term-oriented society. The Hofstede Insight website says Korea encourages saving and effort in modern education as a way to prepare for the future. However, both cou...
Read more

Hofstede's dimensions_ Comparing South Korea, China, Japan (MINJI JEONG)

Image
       Korea, China, and Japan are three neighboring countries in Central Asia and have many cultural connections. Therefore, the three countries were compared through the Hofstede's index. First, it is Power Distanced. This is an indicator of the hierarchical degree of each country. The hierarchies of the three countries are in the order of China, Korea, and Japan.      In terms of individualism , Japan has the highest score of 46. It can be interpreted that this item means the degree of personalization of the country. In comparison, China and Korea recorded around 20 points. This is presumed to be largely influenced by 'collectiveism', a virtue of society that has been emphasized since ancient times.   This can also be found to be related to the number of masculinity . Japan also has the highest score of 95. China followed with 66 points and South Korea with 39 points. I think it reflects Japan's strong individualism and meritocracy.   The...
Read more

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; a...
Read more