Answered: 3)what role

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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ENGLISH QUESTIONS 1)write the meaning of acculturation in your own words. 2)How can TNCs be a blessing and a curse at the same time? 3)what role do the TNCs play in the economy of country? 4)Which countries benefit most from the TNCs?Justify 5)How can the hosting country control the work of TNCs?JUSTIFY

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Theme: Current Issues
10
TNCS and Global Economy
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defined in many various and different clarifications. The term
(1) Globalization can
can refer to the transnational circulation of ideas, languages, companies or popular
culture through acculturation. It can also be defined as a social process independent of man's wil.
It is also a dynamic development process with inner contradictions and a dual nature. It provides
a rare historic opportunity for many countries to develop. One of these developments is the
presence of TNCS.
(2) A transnational corporation is a corporation that has its headquarters in one country and
operates wholly or partially owned secondary offices/stores in one or more other countries. These
"subsidiaries' report to the central headquarters. The growth in the number and size of
transnational corporations since the 1950s has generated controversy because of their economc
and political power as well as their mobility and complexity of the operations they are responsbe
for.
(3) It is estimated that there are now over 100,000 TNCS operating globally. The giant American
conglomerate General Electric (GE) holds more assets abroad than any other non-financial
firm in the world-over $500 billion worth. Its foreign assets make up over 70% of its total, Of
the 100 companies with the most foreign assets, 17 hold over 90% of their assets abroad,
including ArcelorMittal, Nestlé, Anheuser-Busch InBev and Vodafone. Their share of foreign sales
is also substantially larger than GE's. More than half of GE's 300,000-strong workforce is based
Outside America; Toyota, which has slightly more employees, only has 38% of its 326.000 workers
to
(1
abroad.
86
ouators in English

Transcribed Image Text:ul touch 5:00 PM IMG_1437.JPG Current Issues 10 (4) Transnational corporations are one of the most important subjects of international economics. They are directly affecting new trends in international business, global competitiveness on international markets as well as economies of states and nations. (5) TNC plays an important role in developing countries in terms of technology contribution. For example, development of deep-water oil extraction may require mature technical skills and capabilities. For those in West Asia that tend to remain State-owned oil companies in hand may reguire high technology and skillful technical assistance from TNCS which are not locally available, like knowledge of long-distance horizontal drilling expertise used to exploit huge oil. Not only that, certain countries with sufficient expertise sometimes may cooperate with TNC in the development of oilfields like Kuwait. By relying on TNC's advanced technology and managerial expertise, they can be assisted to expand globally. (6) Another advantage that TNC has provided is the enhancement of export. This could be seen through the mineral industries whose exportation TNC has helped to boost by expanding their production facilities, adding value to minerals, and transferring prices within the global market. According to the world investment report, the involvement of TNC in trade has led to the increase of country exportation especially in the field of the mineral industry resulting in minerals becoming the main export source in most of the developing countries, such as in Chile. In addition, the percentage of the exportation of copper in total export goods rose from 38% to 61% in the period of 2003- 2006. (7) Another industry that has been affected by the involvement of TNC in trading is the oil and gas field. The participation of TNC helps increase production and exportation of some countries, like Argentina, Indonesia, and Ecuador. (8) Although TNCS are companies characterized by a high level of production and capital concentration once established, they have their disadvantages. (9) One of the disadvantages that TNC involves in trading includes exploiting cheap labor. Most of the TNCS have decided to move production into low wage countries or developing countries intending on exploiting cheap labor. One of these companies is Nike. In order to enter low wage countries like India and Vietnam, Nike makes agreements with local producers to manufacture their products because of the low labor cost and low production cost. Through the low pay of the labor force, with only a few dollars a day which may reduce their production cost as well, the firm can generate high profit and have a large budget to promote their brand. no) TNC can bring jobs and technology and can inject capital to low wage countries easily as well as leaving easily. All the capital of TNC does not stay in the host country for a long time, but it can be removed at any time by TNC. This can be seen through the example of Sony Corporation that left West Java, Indonesia due to the poor business climate. When there is an opportunity for TNC to inject capital in a low wage country, it could dislocate its factories and offices in this country as it pleases at any given time. man's will. provides che and es. These economic esponsible merican ncial cal. Of ad, eign sales is based 00 workers 11) Transnational Corporations (TNC's) play a crucial role in the development of the global Gconomy through the sharing of research, trade and technological advances between the different Countries. In addition, they also play an important part in increasing the interconnection in the World's economic, cultural and political systems. Innovators in English

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