Blog 4. What is the relation between economics and globalization?

Transnational operation(TNC) is a key to understand economic globalization. Colonial and merchant capitalist created vast business empires at a world scale.First firm to engage in manufacturing production outside their home country didn't emerge until the second half of the nineteenth century, but it has drastically been increased since 1914 in 50 years. We also can see what's called global corporation like General Motors or Toyota. In this globalized world, there is an increasing diversity of TNCs. The reason for TNC activity could be seen as either market-oriented investment or asset-oriented investment. The first one is for companies which have reached saturation point in their domestic market to expand their market to abroad. The second one happened because of geographical unevenness. When a company wants to do TNC activity, they have two major ways. The first one ins 'greenfield' investment which is simply the building of totally new facilities which certainly is a risky venture. The second one is to enter into a strategic collaboration with one or more other firms like Motorola/IBM/Siemens/Toshiba developing new generation of memory chips together. It is important to think of networks of these kind of company or activity because TNCs are way more difficult to coordinate and control then single firms. Many countries made their time by joining and creating international organization such as EU or NAFTA. Asian countries which don't have that strong organization are also trying to make their own one. Living in the world where TNCs are very active is somewhat shaky though and we can see that confusion in WTO. This phenomenon also has brought some issues of how governments should be dealing with this, companies from other countries selling products in the country.

This society is running by market -theory and many people believe 'invisible hand and they think through competition, everything will get better and better. So they are open to agreement between countries like FTA for us. I still haven't been able to decide where to stand in terms of this matter because it is so complex and hard to do so. People still argue about that too. The only thing I am sure of is that TNC should head to more people's happiness. I recently watched a TED video which I also posted in this blog about economic gap in China. I think economic globalization should be contributing to distribute to the poor what we have already not helping the rich have more. My another thought is that economic globalization is closely related to political globalization because it works by the power of each government. That is inevitable but bitter fact.