Blog Assignment 4: What is the relation between economy and globalization? - ZHANG RUIQING

  In the context of the convergence of many views on economic globalization, there is a clear consensus that business companies, especially multinational corporations (TNC), are major players and major shapers of the global economy.

  The chapter focuses on five related issues: (1) the scaleand geographical distribution of TNCS in the global economy; (2) why and how corporations engage in transnational activities; (3) the geographical embeddedness of transnational corporations; (4) the ‘webs of enterprise’ manifested in transnational production networks; (5) the power relationships between TNCS and other actors in the global economy.

  Although the number of TNC from developing countries is growing, developed economies still dominate, with developing countries accounting for less than 10% of the world's total FDI. Similarly, most of the world's FDI flows to developed economies, with developing countries accounting for less than a third of the global total. Although there is significant and growing FDI in developing countries, it is much less than popular opinion would suggest and is largely concentrated in certain parts of eastern Asia and Latin America. As a result, TNC in the global economy are exhibiting increasing diversity. In addition, the first part of the paper explores why and how firms expand their operations beyond their home countries, and generalizes their motivations into two main categories: market-oriented investment and asset-oriented investment. The second part discusses the motivations and ways of transnational investment, focusing on the asset-oriented investment and the two main modes of transnational activities: greenfield investment and enterprise cooperation. The traditional view is that TNC develop gradually in a certain sequence, starting with a strong position in their home market and then entering the international market. The development sequence usually includes direct exports, the establishment of overseas sales points, and may eventually involve the establishment of production facilities abroad. However, this sequence of development is not inevitable and may be interrupted or "short-circuited" for various reasons. The fourth part discusses the geographic embeddedness of multinational corporations (TNC), as opposed to the view of "landless" corporations in the global economy. Geographical location and geographical factors still play a fundamental role in how businesses are created and behave. All firms, including the most geographically extensive TNC, emerge through a complex embedding process in which the cognitive, cultural, social, political, and economic characteristics of the national base play a dominant role. TNCS are therefore "bearers" of these characteristics, which interact with the specific characteristics of the countries and communities in which they operate to produce a unique set of outcomes. In the end, the author mentions that the notion of companies as separate, clearly defined, separate entities is inadequate, and that they should instead be viewed as part of a highly complex and dynamic network of production, distribution, and consumption. TNC, like any other company, can be thought of as a "dense network at the center of a network of relationships."

  After reading the article, I learned about the tension between TNC and other elements of the global economy, including the relationship with the state, local communities, labor, consumers, and civil society organizations. International and sub-international regulatory bodies have also had an impact on TNC. The article highlights the complex and delicate process of negotiation and bargaining between the TNC and the State, while pointing out that the TNC is not always dominant and the state still has considerable influence over the TNC.