A Transnational Corporation Influence on the World Economy

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Three major ways in which TNC’s participate in the economic activities of the host country are through international trade, technology transfer and international (foreign direct) investment. These activities, both individually and collectively, have the potential impact host countries in different ways, and these ways depend on several variables. This paper will examine these internationalisation activities and discuss their impact on the economy of the countries involved, especially that of host countries.
With the new advancements in transportation, information, communication and technology, international trade has become more prevalent over the past few decades, and especially this past one. Locally, international trade has changed the activities of the market. It has created the need for countries to produce more for export and encouraged a greater dependence on imports to fill gaps in local markets. In the past, international trade had been dictated by colonialism, but now things have been changing. New superpowers have arisen, and they have given birth to transnational corporations. …
However, the transnational corporations of developed countries have dominated the global economy. The trade agreements formulated among countries have usually rested heavily in favour of the developed countries. Several reasons have been proposed for this, but two stand out. Even in areas where developing countries have a comparative advantage, participation in the global markets has been limited because of market protection that still exists in both developed and other developing countries. The other reason is that the negotiating powers of developing countries are heavily restricted by tight budgets (Market Access).