R4) What is the relation between economics and globalization?

 Summary

In the globalized market, the TNC is the center of the global economy. We think the TNC is living in a world that crosses borders and is dominated by the TNC. This Reading 4 provides a more detailed description of the TNC's character and significance in the process of economic globalization. 

The beginning of the company, which expanded its sphere of activity beyond home country, was just the level of early international development. This is a further development since charter trading companies such as the East India Company and Hudson Bay emerged in Europe after the 15th century. This led to the emergence of colonies and merchant capitalists, creating a corporate empire. However, the main purpose of these companies was trade and exchange, and the start of the TNC was the time of World War I. Increasingly, TNCs are growing exponentially, and the definition of TNCs at this time is 'an entity with the power to coordinate and control operations in one or more countries'. 

The reasons for TNC activities can be summarized into two main reasons: market-oriented investment and asset-oriented investment. In particular, much of the TNC's investment is market oriented. The company's saturation in its own market or its ability to secure profitability in the international market is why it makes market-oriented investments. The reason for making capital-oriented investments is New International Division of Labour, in which companies from developed countries in the West take advantage of the cheap and arduous labor of developing countries. This is not limited to cheap labor, but to the increasing availability of highly educated, highly skilled and highly motivated workers. TNC develops 'greenfield investment' activities or activities through mergers and acquisitions with other entities. Here, greenfield investment refers to the construction of new facilities. 

While acknowledging the firm power and influence of the TNC in the global economy, the blind belief that it is always right should be avoided. 

 Interesting Point

Within East Asia, a clear intra-regional division of labour has developed consorting of four teams of countries: Japan; the so called 'Four Tiers' of Hong Kong, Korea, Singapore and Taiwan; the South-East 'etnam. Asymmetries of power international corporations are, without Doubt, one – largely the most important – of the primary shapers of the general global economy. 

This is just an example of Asia. The TNC is intertwined with a much more diverse network, and all shapes and sizes are different. As a result, the TNC itself in the global economy, the labor, consumer and civil societies derived from it, are bound to create tension. From an international point of view, this phenomenon leads to a very unstable generalization and is always a struggle. Taking the United States as an example, each state is judged by the law because they are intertwined with each other states. However, as the scope expands and moves on to conflicts between countries, judgment and judgment become complicated. This ends up as a battle of power.  

 Discussion

New International Division of Labour is the use of cheap and arduous labor by companies from developed countries in the West. This is not limited to cheap labor, but to the increasing availability of highly educated, highly skilled and highly motivated workers. This situation is now found in emerging market economies in East Asia, Eastern Europe, Central Europe and cities in India. 

However, is this phenomenon sweet from the perspective of developing countries? This is because as high-quality manpower moves out of the country, domestic companies weaken and the country's own potential for development declines.