Vce Global Politics Textbook Questions (Pg 161)

Topics: International trade, Globalization, International economics Pages: 3 (1080 words) Published: August 31, 2013
1) To what extent are transnational corporations globalised organisations? Transnational corporations (TNCs) are organisations that have a global approach to markets with operations and economic interests in more than one country. They are globalised entities in the sense that they have created social and economic interdependence between nations. This has been facilitated by cross-border movement of people, goods, capital and ideas in the name of business and trade. Social interconnectedness takes place as TNCs are more likely to transplant their existing corporate culture and take their nation’s interests with them when they move offshore. However, there are limitations to what extent TNCs can be considered truly globalised organisations because much of the actual trade generated is largely confined to specific countries or regions. There has been a bias towards the developed north than the poorer south.

2) How have transnational corporations affected world trade? World trade represents the exchange of capital, goods, and services across international borders or territories. As of 2012, the international trade of goods worldwide stands at an estimated $36 trillion. Like the rise of technology, TNCs have sped up this phenomenon simply because they are incredibly wealthy and are a major source of foreign direct investment. Big corporations like General Motors and Walmart are able to command economic resources which are bigger than many of the major nations. TNCs have affected world trade by arguably facilitating a broader distribution of wealth through joint venture. By moving offshore to developing countries, they are reducing levels of unemployment and introducing new technology and capital. However, a negative effect is that in regions and countries where TNCs play a major role, high tariffs on imports have been imposed. This includes the US, European Union and Japan where 88 out of the world’s top hundred TNCs are based. This has...
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