Reading Assignment 4: “economic globalization” ----BAILINHAN

Economic Globalization refers to the process in which world economic activities transcend national boundaries and form a global organic economic whole through foreign trade, capital flows, technology transfer, service provision, interdependence, and interrelationships.

Economic globalization is the flow of production factors such as goods, technology, information, services, currency, personnel, capital, and management experience across borders and regions. This means that the world economy is increasingly becoming a closely connected whole. Economic globalization is one of the important features of the contemporary world economy and an important trend in world economic development. Multinational corporations are the leading force in global economic integration. The vast majority of multinational corporations in the world. In 2002, 96 of the world's top 100 non-financial multinational corporations were from developed economies. Although the share of global FDI from developing countries has increased, it remains small (about 10% of the world total). At the same time, most of the world's foreign direct investment flows toward advanced economies.

Less than one-third of the world's total foreign direct investment goes to developing countries. In fact, the vast majority of foreign direct investment is cross-investment between developed countries. Of course, developing countries receive large and growing amounts of foreign direct investment.

The chapter focuses on five related issues: (1) the scale

and 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.

Interesting point: ‘greenfield’ investment is through partnerships with other companies, either through mergers and acquisitions or some form of strategic collaboration. Greenfield investments simply build entirely new facilities (administrative offices, factories, R&D facilities, sales and distribution centers, etc.). A particularly important example was the series of new assembly and parts plants built by Japanese automobile companies—Nissan, Toyota, Honda, etc.—in North America and Europe (especially in the UK) in the 1980s and 1990s.

Does economic globalization pose more challenges than opportunities to developing countries, or do the opportunities outweigh the challenges?