Reading Assignment 4 : What is the relation between economy and globalization? - Jina Kim

Summary

Reading 4 provides an approach based on the description and geographical experience of the TNC's character and significance in the course of economic globalization, while at the same time providing a theoretical basis. In a globalized market, the TNC is the center of the global economy. The number of TNCs in the global economy has increased exponentially. The most comprehensive definition of the modern TNC, and the definition supporting the discussion in this chapter, is 'an enterprise with the power to coordinate and control operations in one or more countries'. This is what's called a global enterprise, which is known to be doing business all over the world and not at all loyal to any particular country or community. Indeed, the TNC has all its forms and sizes, from so-called global companies operating in dozens of countries to TNCs operating only in one or two countries outside its home country. What they all have in common is that they work in different political, social and cultural settings. The geographical imbalance between this market and assets has created a trend of transnationalization of enterprises. The reasons for TNC activities can be divided into two parts. They are 'market-oriented investments' and 'asset-oriented investments'. Much of the TNC's investment is 'market-driven investment'. Saturation in the domestic market or securing profitability in the international market are factors that determine 'market-oriented investment'. On the other hand, "capital-oriented investment" can easily be thought of as companies in developed countries taking advantage of cheap labor in developing countries. This includes not only labor, but also academic background, skilled skills, and availability of workers. Through mergers and acquisitions with other companies, the TNC wants to strategically work with other companies to enter certain regions, and 'greenfield investment' is to build a completely new facility. However, TNCs are more difficult to reconcile and control than companies that are limited to one country. Companies need more sophisticated organizational structures, and headquarters remain in their home countries. It is not right to blindly believe the influence of the TNC. Because TNC relies mainly on other companies. Both large TNCs and the organization and geography of transnational production networks are incredibly complex and dynamic. Some TNCs are globally or locally extensive, while others are geographically limited. But in all cases, certain places are becoming increasingly connected to transnational networks. This situation inevitably creates tension between the TNC and social organizations such as local communities, consumers and citizens.



Interesting point

After reading the reading 4, I became curious about the economy and globalization, so I searched on the Internet. Globalization is closely related to inequality in economic space. The global economy continues to grow due to the globalization of economic activity, but the gap in the level of economic development between regions is not narrowing but rather growing. The reason for the regional differences in economic development was that the factors affecting the economic environment (natural resources, technology, capital, labor, etc.) vary from region to region, which was interesting because a similar content was shown in the text. In particular, spatial inequality due to globalization has deepened, which can be largely divided into "divide of the global economy" and "expanding economic inequality between regions." In developed countries, major exports are high-priced industrial products and service products, while developing countries mainly export cheap raw materials and agricultural products. This difference in industrial structure has created an unequal trade structure in which wealth is concentrated in developed countries. In addition, developed and developing countries compete under the same conditions through free trade, despite wide differences in economic and production capacity. This creates a phenomenon in which capital is concentrated in advanced countries, thus widening the economic gap between regions.



Discussion

When discussing the economy and globalization, we should first think about ways to address inequality in economic space. At present, various international organizations and regional economic cooperation have been created, and economic cooperation between countries is being actively carried out. It also requires corporate and personal efforts. An example is fair trade, which is a form of trade held at an equal footing between producers and consumers, an ethical consumption movement to return legitimate profits to producers. Recently, it has been promoted as an international social movement. Coffee, cocoa, cotton and clothing, which are usually exported from developing countries to advanced countries, are the main targets. Direct trade helps producers stand on their own feet economically, and reduces the distribution process so that consumers can purchase goods at fair prices. This also has the effect of avoiding the manufacture and import of goods that are accompanied by exploitation of labor or environmental damage to the environment. In fact, I once bought and drank coffee brought in by fair trade, and it was very good to drink delicious coffee at a much lower price than coffee sold by a famous franchise cafe in Korea. I hope there will be many places around us where we can buy and sell fair trade so that many people will be interested.