Blog assignment Reading 4 : “What is the relation between economy and globalization?”- Choi Min Joon

The beginning of the economy and globalization


It can be said that our current era is the era of globalization. This globalization is an indispensable relationship with the economy. Patent and trade companies that have appeared since the 15th century, such as the Hudson Bay Company, have had a great influence on the development of political and economic evolution. These companies can be seen as the ancestors of global trading companies that have a great influence on the globalized economy. However, companies that manufacture and produce in a country other than their own did not appear until the 19th century. Most of them were only trading companies. However, just before World War I, manufacturing companies in many European countries, including the United States and the United Kingdom, made international expansion, and as a result, the TNC number of the global economy increased rapidly for about 50 years. Due to this rapid increase, there was also a difficulty encountered because a system to regulate it was not established.

Transnational Corporation(TNC)


A placeless company is classified as a giant company. These companies are not loyal to a particular country and have secured routes across multiple countries. However, the number of these companies is extremely small, and other companies other than them have no choice but to borrow power from any particular country and can face many restrictions. Looking at FDI is the most common way to classify these companies. Foreign direct investment is direct investment that occurs across borders. It occurs when a company in one country invests in a company in another country or establishes a branch or subsidiary in another country. In particular, FDI has risen sharply in the last 20 years. Through this, it can be seen that economic globalization is accelerating. Also, what has had a great impact on economic globalization are 'Greenfield' investment and agreements with other companies. The Greenfield investment is the development of new zones, which further weakened the constraints of borders. Agreements with other companies are one of the main ways to expand TNC. Companies form complex networks rather than simple relationships, and although there are rivals between them, there are many partnerships that benefit each other. These alliances between companies are not only formed in Korea. The alliance between global companies plays an essential role in economic globalization.

The Development Direction of Economic Globalization and What I felt while reading this article


Economic globalization has been rapidly developing in the same way as above. Globalization has been accelerated by the TNC's high rate of expansion. However, there is also a problem. There is a lack of global regulations to restrain him due to the too-accelerated TNC expansion. After all, there is a concern that powerful countries will monopolize the TNC expansion. Therefore, globalization will proceed in a balanced manner only when international regulations related to the TNC are organized to increase the possibility of developing countries.
There are also problems with mergers and cooperation between companies. All companies pursue the interests of their subsidiaries. That is why many business problems arise.

As a result, the TNC has a severe imbalance between countries, which can eventually lead to social imbalance and globalization imbalance. Therefore, new regulations to prevent this should be urged, and more efforts and attention should be paid to not lose the advantages (for example, securing diversity) gained through current economic globalization.



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