EQ2 The importance of TNCs to global economy Flashcards
What are TNCs?
Transnational Corporations (TNCs) are the world’s most powerful economic force that operate across national boundaries.
What is the impact of TNCs on global inequality?
TNCs favor the developed world and inhibit the development of the developing world, leading to a rich-get-richer, poor-get-poorer scenario.
Which historical company controlled much of India in the 18th and 19th centuries?
The East India Company.
In 2006, how many of the top 10 TNCs by revenue were American?
6 of the top 10 TNCs were American.
What are the two types of TNCs?
- Privately owned TNCs
- State owned TNCs
What characterizes privately owned TNCs?
Their shares are owned by numerous stakeholders, typically including other TNCs, banks, and large financial institutions.
What characterizes state owned TNCs?
They are majority or wholly owned by the government and are dominant in emerging superpower countries.
What percentage of world trade is accounted for by the biggest 500 TNCs?
Nearly 70%.
How do TNCs drive globalization?
They relocate manufacturing to countries with lower labor costs to increase profits for shareholders.
Provide an example of a TNC that has relocated manufacturing to benefit from trade agreements.
Toyota has bases in Mexico to manufacture and export vehicles within the NAFTA free trade area.
What percentage of the global fortune do TNCs from emerging market countries account for?
30%.
What is Alibaba known as and what is its significance?
Alibaba is known as the Amazon of China and is the biggest global online retailer.
What was the impact of TNCs on global trade in the 2000s?
Global trade increased in value by over 85%.
What has contributed to the shift of economic power from western economies?
The global shift of manufacturing to Asia by TNCs.
According to UNCTAD, what percentage of all global trade is accounted for by TNCs?
80%.
