Economic globalization - Jang Yerim

1. summary
 The business corporation – specifically the transnational corporation (TNC) – is the central actor in economic globalization.
 (1) the scale and geographical distribution of TNCs in the global economy .
 As essentially colonial and merchant capitalists, the East India Company and the Hudson’s Bay Company, created vast business empires at a world scale. However, the first firms to engage in manufacturing production outside their home country did not emerge until the second half of the nineteenth century. by the eve of World War I, in 1914, considerable numbers of US, UK and some continental European manufacturing companies were becoming increasingly transnationalized.
 Using a more restrictive definition, based on ownership criteria alone, UNCTAD (2004: 8) estimates that around 61,000 TNCs currently carry out international production in over 900,000 foreign affiliates. These operations represent roughly one-tenth of total world gross domestic product and generate one-third of total world exports. And the top 100 (less than 0.2% of the total number of TNCs worldwide) accounted for 14% of the sales of foreign affiliates worldwide, 12% of their assets and 13% of their employment in 2002.
 (2) why and how corporations engage in transnational activities.
①MARKET-ORIENTED INVESTMENT
 A firm may have reached saturation point in its domestic market.
 Increasing profitability may well depend, therefore, on being able to expand its market beyond its home territory.
②ASSET-ORIENTED INVESTMENT
 Traditionally, it was the geographical localization of many natural resources that drove much of the early development of TNCs. Firms in the natural resource industries must, of necessity, locate at the source of supply. And there are human resources or assets. The skills and knowledge embodied in people in a particular regional environment with specific social and cultural composition. It includes the intention of using cheap, unorganized labour in developing countries. Such assets are geographically very unevenly distributed.  But it is not only labour costs that are the major driving force. Except in those industries where unskilled – and, therefore, cheap – labour is important, it is other attributes of human capital that have become more significant. In particular, it is increasingly the availability of well-educated, highly skilled and strongly motivated workers located in ‘quality’ communities that are exerting a very strong influence on TNCs.
 (3) the geographical embeddedness of transnational corporations.
 Contrary to much of the received wisdom on the global economy, place and geography still matter fundamentally in the ways in which firms are produced and in how they behave. All business firms, including the most geographically extensive TNCs, are ‘produced’ through an intricate process of embedding in which the cognitive, cultural, social, political and economic characteristics of the national home base play a dominant part.
 (4) the ‘webs of enterprise’ manifested in transnational production networks.
 All business firms are constituted as, and embedded within, highly complex and dynamic networks of production, distribution and consumption. Such networks have become increasingly extensive geographically and controlled. TNCs, therefore, like firms in general, can best be considered as ‘a dense network at the centre of a web of relationships’ (Badaracco 1991: 314). By the very nature of their dispersed geographical spread across different political, cultural and social environments, TNCs are far more difficult to coordinate and control than firms whose activities are confined to a single national space.
 Characteristically, the corporate headquarters of TNCs invariably remain in the firm’s home country (often in the community in which the firm originated).
 Compared with corporate headquarters and R&D facilities, there is no doubt that production activities have become more dispersed geographically in the search for key assets and/or proximity to markets.
 A number of geographical configurations of TNC production activities are apparent (Dicken 2003a: 246–50). One option is to concentrate production at a single location. Such globally concentrated production generates economies of scale in production but increases transportation costs and lessens the firm’s knowledge of distant markets. A second option is to produce specifically for a local/national market. Here economies of scale are limited by the size of the market. A third option is to create a structure of specialized production for a regional market (such as the European Union). A fourth possibility is to segment the production process and to locate each part in different locations: a form of transnational vertical integration of production.
2. interesting point & Discussion
 Now that globalization is going faster than ever, I often wonder, who is the real driver of the global community? As the boundaries of a country fade away, and as the government's grip is significantly weakened, Transnational Corporations are stepping in.
 There have often been cases of Transnational Corporation dominating state power, and now there is even concern that the global community's main player may be a TNCs.
And, TNCs are increasingly acting like countries all over the world. Will this trend proceed faster? Is there an appropriate alternative to preventing the tyranny of TNCs?