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Globalization- trade and transnational corporations

Globalization connects people, ideas, and goods worldwide, driven by technology and international trade. Transnational corporations (TNCs) play a key role, operating across borders to maximize opportunities. While globalization can boost economies and spread culture, it also raises concerns about worker exploitation and job loss. Despite challenges, it offers benefits like resource allocation and product affordability. Created by Sydney Brown.

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Video transcript

Voiceover: Today we live in a global community no longer limited by physical boundaries. People across the world are connected by the internet, by communications, by the ease of travel. People, money, information, ideas, services, and goods are constantly moving between countries. This causes cultural and economic changes in the countries involved. This is what we call globalization. As technology has advanced so have the possibilities of international trade and exchange. The increase in international trade has both created and been supported by international regulatory groups like The World Trade Organization and transnational trade agreements like The North American Free Trade Agreement. Anymore there isn't a single country that is completely independent. All are dependent, to some degree, on international trade for their own prosperity. Without international trade there'd be no need for international regulatory groups, and without the international regulatory groups international trade at the current massive scale would be impractical. The trade regulatory groups and agreements regulate the flow of goods and services between countries. They reduce tariffs which are taxes or imports, and make customs procedures easier. This makes trading across national borders much more feasible. These international trade agreements often benefit private industries the most. Companies can produce their goods and services across many different countries. You could have a backpack that was designed in the United States, but the materials came from China and it was put together in Mexico before it was shipped back to the United States to be sold. These companies that extend beyond the borders of one country are called multinational or transnational corporations. TNC's for short. They intentionally surpass national borders to take advantage of whatever opportunities they can find in different countries to manufacture, distribute, market, and sell their products. Some TNC's are pretty obvious, like McDonald's or Coca-Cola, and yet they still market themselves as an American company. Other TNC's can be surprising, like General Electric which is based in the States but has more than half of its business and employees working in other countries, and Ford Motor Company, the classic American car company, headquartered in Michigan, that manufactures its cars worldwide. These and other transnational corporations have significant sway in the global economy. Some TNC's have a greater economic weight than entire nations. They influence the economy and politics by donating money to specific political campaigns or lobbyists, and can even influence the global trade laws of the international regulatory groups. Globalization has two major impacts on a country, on the economy of the country and on the culture. Much of the economic globalization results from the global market competition for cheap labor. TNC's will often locate their factories in whichever country can provide the cheapest labor in order to save on expenses in the making of a product. As a result, developing nations will provide incentives like tax-free zones or cheap labor so the TNC's will set up shop in their country in hopes of bringing jobs and industry to beleaguered agricultural areas. This promotes more rapid advances in the developing nation because of the ideas and innovations brought over from the industrialized nations. It also makes nations around the world more interdependent which minimizes the potential for conflict, but in the end these incentives often hurt the working population of the developing nation. The upper classes may benefit from the business of the TNC, but the people working in the factories are exploited as their wages are cut and often they are prohibited from unionizing. It can even result in sweatshop conditions for the workers with long hours, substandard wages, and poor working conditions. If the labor laws in one country become too restricted to the TNC they can just move their factory to a new country, leaving widespread unemployment in their wake. Setting up factories in these developing nations may also hurt the core country where the TNC is based because many potential jobs are being sent abroad. The same thing happens when companies outsource their labor to other countries. Outsourcing has really been enabled by technological advances, allowing immediate communication across the world, and the ease of transporting people, goods, and information. When companies find people in other countries willing to work for a lower wage they will often employ them which is great for the company because they save money, and it's great for the people in other countries because they now have a job, but it also means that the people in the core country are losing jobs and having difficulty finding new ones. There seems to be a lot of negative effects of globalization from transnational corporations, and yeah, free trade does promote the self-interested agendas of corporations and give them autonomy and influence in politics, and allow workers to be exploited, but there are also positive effects, like the better allocation of resources, lower prices for products, more employment worldwide, and higher product output to name a few. There is benefit seen by all countries involved in free trade. The changes a country experiences from international trade are not just economic. Many of the cultural changes are just as important and sometimes even more obvious in the economic changes the nation can experience. As international trade becomes easier and more widespread more than just goods and services are exchanged. Cultural practices and expressions are also passed between nations, spreading from group to group which is called diffusion. It's somewhat a scientific use of the word where a substance will move from areas of high concentration to areas of low concentration. Here, ideas and practices spread from where they are well-known and frequently apparent to places where they are new and not often observed. In the past exploration, military conquest, missionary work, and tourism provided the means for the trading of ideas, but technology has exponentially increased the speed of diffusion. Now, mass media and the internet allow the transfer of ideas almost instantaneously. This is most commonly seen in the transmission of scientific innovations and the spreading of North American culture which dominates the internet. So, this is globalization, the exchange of ideas, products, services across countries that become integrated into foreign cultures and affect foreign economies, international trade, transnational corporations, tourism, missionary work, the internet, and more all contribute to globalization because people and corporations bring their own beliefs, their traditions, and their money with them when they interact with other countries. These ideas and capital can then be incorporated into, and thus change the cultures and economies of these foreign nations.