Professional Documents
Culture Documents
Resource Management
Week 1
Historical developments in
international economic activity
(Hirst and Thompson 1996, Chapter 2; Harzing & Ruysseveldt, 2004/5, 2011)
Globalisation: the historical context (2)
Trade Production
12
10
8
6
4
2
0
1950-63 1963-73 1973-90 1990-01
(WTO, 2002)
Theories of determinants of
economic internationalisation
Narrow Definition
direct ownership of operations overseas measured by FDI (foreign direct
investment)
Broad Definition
‘a company which either directly or indirectly controls production or
service provision in two or more countries’
UNCTAD, 2006
MNCs/TNCs: from investment to Global control
In 2002, the top 100 TNCs employed over 14.3 million
workers of which just under half worked in their foreign
affiliates in 2002 (UNCTAD)
0
20
40
60
80
100
120
140
160
180
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Companies vs Countries (1997)
To n
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W ot
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MNCs/TNCs and Sovereign states
lo l
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P h ue
ill la
ip
in
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Country or Corporation
Micro-level explanation for why
Firms go ‘multinational’
Factor Supply
Raw materials supply (secure control)
‘Transfer pricing’ strategies.
Labour supply (cheapest labour costs, ability to divide and
rule); but issues of labour costs as proportion of total costs
and productivity
Motivations for internationalisation:
Dunnings’s Eclectic paradigm