Blog Assignment 4. What is the relation between economics and globalization?

 What is the relation between economics and globalization?

Summary

Certainly, the chartered trading companies, which emerged in Europe from the fifteenth century on wards – such as the East India Company and the Hudson’s Bay Company – played extremely important roles in the evolution of an increasingly interconnected political economy. As essentially colonial and merchant capitalists, they created vast business empires at a world scale. The main reason of such firms was trade and exchange and, in that sense, they are clearly the ancestors of today’s global trading and service companies.

Since then, and especially during the past 50 years, the number of TNCs in the world economy has grown exponentially.

Unfortunately, it is a definition that is impossible to quantify in aggregate terms because it involves a number of qualitative attributes concerned with the complex relationships between, and within, firms operating across national boundaries, for which no comprehensive data areavailable. 

There are 2 ways for firms to 'transnationalize' their businesses. The first ways is Market-oriented investment. Despite recent developments in TNC activity, much of their investment continues to be market-oriented. domestic market (an issue clearly related to the overall size of the national market). Increasing profitability may well depend, therefore, on being able to expand its market beyond its home territory. The second ways is Asset-oriented investment.The geographical unevenness of markets is one major set of reasons why firms engage in transnational investment. 

There are two major ways in which firms develop transnational activities: one is through what is known as ‘greenfield’ investment; the other is through engagement with other firms, through either merger and acquisition or some form of strategic collaboration. Greenfield investment is simply the building of totally new facilitie.

interesting

Starting with TNC achieving a strong position in the domestic market, it was customary in the international business literature to claim that they would only go abroad after it was achieved. I'm new to know that TNCs are generally identified in order. However, there is nothing inevitable about such a sequence. The process may be interrupted or ‘short-circuited’ for a variety of reasons. More significantly, the emergence of a new generation of TNCs,

Discussion

Greenfield investment is a type of FDI, in which foreign companies directly establish and invest production facilities or corporations in the countries to be invested. For that reason, it is generally the most preferred type of investment for the host country. Brownfield Investment, which is opposed to Greenfield Investment, also takes over companies or factories that already exist in foreign countries and makes inroads into foreign markets. I would like to discuss the advantages of investing in Brownfield investment.

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