Reading Assignment 4: “Economic globalization"-----ZHANG LINYUE

 Summary

 This article highlights the significant role played by multinational corporations in economic globalization. It provides a multidimensional analysis of multinational corporations to illustrate the phenomenon of economic globalization. Discussing the scale and geographical distribution of multinational corporations, the article summarizes their importance in the early development of the international economy. Charter companies such as the East India Company and Hudson's Bay Company played a crucial role in European development, serving as precursors to global trade and service corporations.
   While multinational corporations in the manufacturing sector emerged in the latter half of the 19th century, by the eve of 1914, companies from countries like the United States and the United Kingdom had already become increasingly multinational. Over the past 50 years, the number of multinational corporations has grown exponentially, becoming a key force in the global economic integration capable of coordinating and controlling operations in more than one country. Most of the top global multinational corporations still maintain over half of their activities in their home countries, exhibiting diverse forms and scales.
  Foreign Direct Investment (FDI) has become a primary indicator measuring multinational corporations' activities, surpassing the growth of world trade and emphasizing their significance in the global economy. Although the quantity of FDI in developing countries is increasing, it is highly concentrated in a few nations, primarily in East Asia. Multinational corporations in the global economy are becoming increasingly diverse.
   The article also elucidates the stage of development that economic globalization has reached. Exploring why and how businesses engage in multinational activities, it describes two main orientations when making investments: market-oriented investments and asset-oriented investments. Market-oriented investments involve close integration with local markets, considering not only market size but also market characteristics, which play a crucial role in site selection decisions. Asset-oriented investments increasingly focus on emerging market economies, especially in East Asia, Eastern Europe, and Central Europe, holding a significant position in current global trade.
  Furthermore, the article outlines two primary approaches companies use for international expansion: greenfield investments and strategic collaborations. While greenfield investments, despite being an effective expansion method, are not the most common overseas expansion model due to their risks and high costs. Strategic collaborations involve establishing business relationships with other companies through mergers, acquisitions, or other forms of cooperation. Companies do not form singular alliances but build alliance networks, where relationships among cooperating companies are becoming more multilateral, polygamous, forming a "collective competition." This illustrates the complexity and diversity of how businesses operate in the global economy, achieving international expansion and cooperation through various means.
  From the perspective of the geographical embeddedness of multinational corporations, the article emphasizes the fundamental impact of geography and location on the ways companies produce and behave in the global economy. It underscores the complex and enduring interactions between multinational corporations and their rootedness in specific geographic locations and environments, resulting in diversity rather than homogeneity in their global economic performance.
Taking the viewpoint of multinational production networks, the article explores corporate networks and multinational production networks, illustrating the complexity of corporate networks, explaining the sources of organizational structure and diversity, and highlighting the diversity in the organizational and geographical structures of multinational corporations.
   In conclusion, the article emphasizes the diversity, complexity, and complex relationships of multinational corporations in the global economy, while also underlining the continued significant influence of nations throughout the entire process of economic globalization.


Interesting points

  I find it interesting that despite the significant role played by multinational corporations in the global economy, nations still retain significant influence. The intricate and complex negotiation and bargaining processes between them highlight the ongoing importance of nations in guiding and regulating the behavior of multinational corporations.


Discussion

    How will the development of multinational corporations evolve in the future? What will be the nature of their relationship with nations?

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