A.*, PhD in Economics Vlasenko M. **
*Bellerbys College London (the United Kingdom),
**Oles Honchar Dnipropetrovsk National University (Ukraine)
IMPACT OF TRANSNATIONAL CORPORATIONS ON THE GLOBAL ECONOMY IN TERMS OF
is the process by which the world is increasingly interconnected as a result of
a massive increase in trade and cultural exchanges . Economic globalization
is based on cross-border expansion of the market economy, which proclaimed free
trade. This resulted in the appearance of transnational corporations.
Transnational corporations (hereinafter referred to – TNC’s) are actors who can
carry on business for profit in more than one country. Statistical data
suggests that the 500 largest companies control more than two thirds of world
trade. While 100 companies are estimated at approximately one-third go foreign
direct investment overall (hereinafter – FDI) .
1. IPAs’ selection of the most promising investors (FDI) in 2013-2015 
and facilitating FDI can create jobs and other benefits to local economies.
Thus, most governments are implementing investment promotion agencies (IPAs)
specifically mandated to attract FDI.
largely consider TNCs from the developed countries as the most potential sources
of FDI in the medium term, although developing countries are still increasingly
important for foreign investors. Indeed, 60 percent of IPA respondents placed China
to the first grade of the rank as the most promising source of FDI in 2015,
largely due to the rapid increase in FDI in recent years. The United States of
America, Germany, the United Kingdom of Great Britain and Northern Ireland,
Japan and France are classified as investors from the developed countries and
the most promising economies, but their ongoing role in global FDI flows is
being underscored. India, Republic of Korea, the Russian Federation, the United
Arab Emirates and Turkey (for the first time) are also considered major sources
of FDI from the developing countries .
is a viewpoint that economic globalization through TNCs is the most is the most
reliable means of reducing poverty. Many TNCs invest in developing countries
(LDCs) because of low cost of operation there . In the 2013 developing
economies received 53,6% from overall FDI inflows. This increases the number of
new jobs consequently skills and reduces the high level of unemployment in such
countries as Chad, China, Jamaica . In general, a country benefits from
inward investment, as it brings wealth and foreign currency – extra money,
which can be spent on improvement in humanitarian sector and infrastructure. “Asian Tigers” are major beneficiaries:
Singapore, Hong-Kong, Taiwan fully embraced globalization by welcoming such
TCNs as Nike .
contrary viewpoint is that TNCs just explore undeveloped countries by using
cheap raw materials and cheap labor force. As the form of neocolonialism,
economic globalization forces poor countries to open up their markets and allow
their resources to be plundered by rich states . Usually TNCs may operate in
less developed countries in a way that would not be allowed in the more developed
countries. This includes environmental pollutions, unsafe working conditions,
ignoring human rights, for example, by employing child labor. In the 2013 there
were 9.2 million (8.4%) of children involved in the child labor in the Middle
East and North Africa . It also should be mentioned that many TNCs are
engaged in illegal activities such as tax avoidance, bribes to local official
etc. So the conclusion can be made that TNCs can manipulate with the less
developed countries’ economic status and ignore local concerns.
comes from the state policy, which is driven by the need to attract inward
investment. It can be considered that economic globalization diminishes the
influence of the nation government and therefore restricts public
accountability. Therefore, such loss of economic control makes states
susceptible to decisions that are made in faraway places and TNCs do not need
to take local interests into consideration.
List of References:
1. Global Politics / A. Watters, R. Marston, D. Cleaver, Foreman C. – Anforme
Ltd, 2008. – 90 p.
2. World investment prospects survey 2013–2015 [Electronic resource]. –
United Nations Conference on Trade and Development, 2013. – Available online
3. Brewer Q. Economics / Q. Brewer.
4. As&A Level Economics (Oxford Revision Guide) / A. Gillespie // Oxford
University Press, 2008. – 121 p.
5. Introduction to International Relations / J. Grieco, G. J. Ikenberry,
M. Mastanduno. – Palgrave
MacMillan, 2014. – 576 p.