What is the relation between economics and globalization? - Park Jieun

- Summary

Only a few companies are truly considered global corporations. A Transnational Corporation (TNC) refers to a firm with the power to operate and control operations in more than one country, and these global corporations usually base their headquarters in their home country. The first reason they seek to expand into overseas markets is that the domestic market no longer offers opportunities to achieve the value they pursue. They actively utilize Free Trade Agreements (FTAs) to save on tariffs and export overseas, expecting higher profits from foreign consumers. Furthermore, issues such as a lack of necessary resources, labor shortages, and labor costs also exist. In addition, as they have grown through globalization, they actively utilize transnational networks. They can solidify their position and pursue economic efficiency by leveraging their headquarters in the home country and production plants located in other countries. Mergers and acquisitions (M&A) can also greatly contribute to economic globalization. By leveraging geographical differences, the active interaction between the state and corporations is also highly relevant to regionalization.


- Interesting point

It is impressive that only a few companies are actually global, and they should be recognized as regional companies. Even the representative companies we commonly know, when analyzed closely, have their headquarters fixed, and their scope of activity is still more heavily concentrated around the headquarters. Most of them have their headquarters in developed countries, and I believe they focus more on developed countries than on being truly global. This situation means that, contrary to the term 'global,' they are only a minority. It implies that it is still difficult for global companies to reach developing countries, which could lead to a biased flow and the deepening of economic inequality. Global companies, too, try to maximize value in familiar environments rather than adapting to completely different cultures, showing that while geographical distance is a solvable problem, cultural or environmental distance is difficult to resolve.


- Concerns, Discussion and Questions

The labor problem can be considered the biggest issue. I think the fact that TNCs, despite being global corporations, set up factories and proceed with production in developing countries means that labor is strongly localized. Since labor costs are low in developing countries, problems of labor exploitation may arise. A strategy is needed for labor unions or labor organizations to work with an independent position against TNCs. Furthermore, labor unions often lack power, making it difficult to compete against large corporations, so methods are required to exert real pressure and protect their rights. A transnational strategy, such as establishing minimum international labor standards, is required.


- Using AI

I used Gemini for the translation and summarization of the response.

- Using AI

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