Reading 4: “What is the relation between economics and globalization?”. —TANG YINI

 In Peter Dicken’s Economic Globalization, the author explores the complex relationship between the economy and globalization, particularly the critical role of transnational corporations (TNCs) in the global economy.

1. TNCs as the Core of the Global Economy: In the process of globalization, TNCs are seen as the main drivers. These companies, by conducting business in multiple countries, influence the development of the global economy. While some TNCs are viewed as borderless global enterprises, in reality, many still retain the majority of their activities in their home countries. This shows that even in the context of globalization, national and regional factors continue to significantly impact corporate activities.

2. Growth of Foreign Direct Investment (FDI): The global expansion of TNCs is primarily achieved through foreign direct investment (FDI). Over the past decades, FDI has grown at a much faster rate than world trade, indicating the increasing power of TNCs to integrate the global economy through investment. While TNCs from developed countries dominate global FDI, the number of TNCs from developing countries is also gradually increasing, particularly in East Asia.

3. Global Production Networks: TNCs coordinate their production activities in different countries through complex global production networks. These networks involve not only the internal structure of companies but also external suppliers and partners. Such networks greatly expand the global reach of companies, allowing them to optimize resource allocation and market development on a global scale.

4. Power Relations between States and TNCs: While TNCs hold a dominant position in the globalization process, states still maintain significant influence over TNCs, particularly in setting rules and requirements for market entry. Negotiation and collaboration between TNCs and states are key components of the global economy, with both sides continually adjusting their positions in competition and cooperation.

   In summary, economic activities in globalization are not solely driven by the global expansion of TNCs but also involve the complex interactions between states, markets, technology, and policies.

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