Globalization and TNCs Motivation Essay

Research reveals that Transnational Corporations commonly abbreviated as TNCs exert an immense influence in the current economy which has embraced the concept of globalization. There is widespread discussion as to whether globalization is a new or old phenomenon. Some analysts consider the concept to be new as well as revolutionary. Others including Kenneth Waltz argue that, in comparison to the era prior to the first world war, the current global set up has underachieved in terms of the level of intensification (O’Rourke and Williamson, 2000). Furthermore, the earlier governments especially before the First World War had less intervention than the government of today. The aforementioned points are valid but they also do not denounce that capitalism brought a vigorous stride in global integration that was affected by the interwar of between 1918 and 1939 and the Cold War. The degree of consolidation of the worldwide production systems and disengagement of nations from economic activity may still be below the levels achieved in 1910. However the present rate of globalization particularly by TNCs is high and the level of intensification may soon exceed the prior set records (Hill, 2005). Notably, the welfare state set up that had been predominant since years of the interwar in the 21st century has declined. As a result, TNCs have witnessed a new direction in global order that is designed in line with the reasoning tradition of Milton Friedman and Friedrich Hayek. According to Hayek, for example, the concerns of social imbalance by TNCs are just indication of the outdated communalistic idea which should be scraped out and replaced by individual responsibility and freedom the issues of poverty and inequality not withstanding. Again, there is an increase in the outlook that national economies have integrated into a common space of worldwide economy; furthermore, only one form of organization is appropriate. The realization of a single global economy has still a long way to go. However, there is a powerful force propelling the world to that direction. Controversy also mars the factors that promote TNCs globalization. Obliviously, technological development has contributed to the intensification of interdependence. However, it is not substantial to claim that technology, by itself, would precipitate globalization. For instance, it is unclear whether capital mobility would be achieved due to technological advances alone; development in communication coupled with capital flows deregulation have improved capital mobility. Some sectors agree that globalization is modelled by the forces of the market system. In argument, to realize an economic system a political system must come in handy. Therefore, globalization is dictated by the assent of governments and in this regard, the United States predominant power as well as other developed nations (Friedman, and Ramonet, 1999). The strict followers of the market system argue that the reception of globalization by TNCs is inevitable such that they cannot prevent globalization in which case they would incur immense costs. Interest of powerful capital can punish national governments which implement monetary and fiscal policies that impact greatly on their visions. In these circumstances, developing countries have sided with capital due to amounting pressure from the advanced nations and the multilateral globalization agents. Capital has caught the attention of most countries governments. It is unforeseen that the world economic order perceived in globalization will be viable in a situation where labour arrangement is sufficient to counterbalance the effects of capital governments. Powerful nations like the United States cannot be deemed helpless against globalization. They can determine its fate at their own will or where there are changes in the balance of power amid social classes of the powerful nations. The death of globalization in the nineteenth-century, due to mostly political pressure, adds to the point that globalization is not a passing wind that is controlled by merely the technological advancement and market forces. (Chossudovsky, 2003) Globalization has different meanings depending on its global nature, how it impacts individuals and perspectives that such people have about this concept. Some individuals define globalization as being that state where each and everyone in the society is a resident of that global society. To other people it refers to the issue of Transnational Corporations taking advantage of poor nations to augment there financial bases through exploitation of human resource as well as the available raw materials in such countries. Globalization is understood as a complex concept that has brought much controversies world wide. Research indicates that globalization have little harmony in regard to what it is and whether it is a new or an old idea. Therefore globalization implies a process of aggravation of political, economic, and cultural interdependence amid the different actors within the global system. We also find that globalization is more systematic in the economic field where it signifies a process of intensification of national economies with the purpose of developing the capacity of the global economy to work as a unit (Joseph, 2001). This integration comes with certain socioeconomic conditions as well as policy mechanisms enhanced by TNCs. Therefore, understanding globalization necessitates the description of the underlying context that makes it viable, as well as the institutional set up and policy frameworks within TNCs that promote it. Over the last two decades, some significant changes in the global system have precipitated globalization particularly when TNCs global activities are considered. One is the changes in power distribution on a global level where any nation could have emerged as the sole superpower. This development has therefore eliminated the competition among nations for global leadership and dominance; it would be difficult to have a common economic space while there are competing superpowers. However, in this regard, globalization is perceived as a United States dominated set up. In addition, it implies that if another superpower emerged, then the process would be reversed. The other factor that is found to be affecting this globalization concept is the predomination of capitalism and the free market economic system. Research indicates that conflicting economic frameworks and visions would not be compatible with the processes of making a common economic space. Under this we find that lack of competition between various economic visions has been described one of the leading factor for globalization (Held and McGrew, 2002). Several policy instruments have been created to act as mechanisms of globalization; this is after the establishment of the acknowledged underlying conditions. There has also been creation of fresh multilateral institutions with the restructuring of the older ones so as to manage and promote the mechanisms of globalization; a few key examples include the International Monetary Fund (IMF), The World Trade Organization (WTO), and the World Bank. The policy mechanisms developed in harmony with a neoliberal ideology that is also stated to be fostering globalization; disengagement of a nation in economic activities regarding to the regulation and institutional changes like trade barriers restriction, privatization, and capital mobility liberalization are some examples of these mechanisms. Under this we find that many developing nations, the World Bank and IMF through their sponsored programs have been the vehicle behind the adoption of these globalization mechanisms (Chossudovsky, 2003). Globalization Debate Research indicates that there is growing debate about the reality of TNCs globalization with two arguments arising; that globalization brings prosperity and that globalization brings impoverishment. Those who argue that it brings prosperity are the proponents while the later are opponents of this concept. Those who oppose globalization cite some issues associated with the growth of this concept and include; nations which are poor are always disadvantage for example countries who rely on agricultural products and their domestic markets having experiencing competition from Multi-National Corporations in same industry which force the local firms to offer there commodities at cheaper prices thus leading to making of loss by such firms. (Joseph, 2002) The other issue is that of exploitation of employees of foreign origin by utilizing them as labour and paying them fewer wages and salaries on the work done. Also TNCs may subject such workers to working for long hours with less pay. Such a situation particularly in poor countries like in Africa has led to escalation of poverty levels since such workers may not be able cater for their basic needs. Globalization has also led to sudden shift to service work from manufacturing processes; this is because of the service provision being considered cost effective particularly when viewed from the aspects of offshore employees and such workers shifting to service industries. Such scenario particularly in Africa and some Asian Countries has led to increase in economic gap between the unskilled and the skilled employees. There is also an argument that globalization has resulted to growth of contingent jobs in that many TNCs like the Coca Cola Companies are now favouring the recruitment of part-time or contract based workers thus saving costs that they have could incur on the recruitment of full-time employees. Such scenario have led to job insecurity since the workers will not receive benefits like pension benefits when they will retire thus making life difficult particularly for the old in the society. Globalization has also led to weakening of labour trade unions in that many firms are set up in different parts of the world and there have also been an increase of unemployment rates meaning that there exist surplus of workers in many modern economies. A good example is in the U. S where firms can replace the employees at will since the existing unions have limited powers to protect their workers. (Tehranian, 2001) On the other hand globalization enhanced by TNCs has brought some benefits or what is commonly referred to as prosperity by its proponents and they include the following; globalization has led to production of a lot of products in the market which are of quality and at the same time extensive access of overseas commodities. This concept has also led to realization of worldwide ordinary market and at the same time to introduction of financial markets which is integrated and thus can lead to many opportunities like securing loans and external financing arrangements. Globalization has also resulted to enhancement of international relations between nations. This is because several firms from different countries are now investing in their markets of choice thus making the world to be the global village (Hill, 2005). The inception of globalization has also led to enhancement of information flows among geographically inaccessible places in the world; for example commercial banks from the UK have now invested in Africa especially in Sudan which has been inaccessible because of lack of political stability for a long period. Globalization has also led to introduction of new technologies by TNCs and thus such technologies have increased the pace of production by different firms in there manufacturing processes. Other benefits of globalization include fostering of tourism, increase of multi-culturalism, increase in local consumptions of locally produced products, has fostered sports competition such as Athletics championships and FIFA World Cup, creation of collective values, development of good worldwide telecommunications structures and the accomplishment of free movement of individuals of all countries among other benefits.