Economic, Cultural, Social and Political Impact of Economic Activities - Term Paper Example

261502 Discuss the economic, cultural, social and political impact of TNCs’ economic activities. Outlined below is a discussion of the economic, cultural, social and political impact of TNCs’ economic activities in the modern world. The economic, cultural, social and political impact of TNCs’ economic activities has frequently been linked to the concept of Globalisation. The economic, cultural, social and political impact of TNCs’ economic activities has arguably increased the use of the concept of globalisation in part due to their contribution the spread of information technology. The economic, cultural, social and political impact of TNCs’ economic activities are discussed in order to understand how businesses have brought about a great deal of change to the contemporary modern world (Gaddis, 2005 p. 264). It has been argued that the economic, cultural, social and political impact of TNCs’ economic activities varies. It varies as modern nation states have retained the power to be able to pick and choose the TNCs that they wish to accept and those companies that they wish to prevent or restrict (Gaddis, 2005 p. 275). For instance, although nation states have such as China and Indonesia have wholeheartedly embraced the economic liberalisation that is generally considered to be the central feature of the process of globalisation that does not the economic, cultural, social and political impact of TNCs’ economic activities has been endorsed. The governments of these countries have been free to block and restrict the political and cultural elements of TNCs activities that they disprove of, without other countries or non-governmental organisations forcing them to do anything (DICKEN, 2003). One frequent misconception about the economic, cultural, social and political impact of TNCs’ economic activities is that it is also a process that treats every nation state in the same way, so it is misleading, to argue that the combined affect of TNCs will weaken the sovereignty of every country. It is probably over optimistic to believe that the economic, cultural, social and political impact of TNCs’ economic activities will ensure that virtually every country will become at some point a capitalist liberal democracy that happens to be part of an increasingly interconnected global economy (JONES, 2005). Some argue that the global economy is heavily linked to the economic, cultural, social and political impact of TNCs’ economic activities, which actually makes the governments of nation states dependent upon the whims of such companies in order to drive forward economic growth and prosperity (Warren, p. 85). The economic, cultural, social as well as the political impact of TNCs’ economic activities cannot be equal as not all of the world’s nation states have equal amounts of power, influence, and status. The global system is asymmetric, and therefore as a consequence the economic, cultural, social and political impact of TNCs’ economic activities is also asymmetric in the way it operates and affects countries. The economic, cultural, social and political impact of TNCs’ economic activities is not a process that has inevitable outcomes, and its effects do not have to be harmful (Todd, 2002 p. 63). There are of course strong counter arguments that the economic, cultural, social and political impact of TNCs’ economic activities is based on reality. Understanding the role and affect of TNCs assists in evaluating and explaining strongly inter-connected political, cultural and economic trends. The catalysts for such trends and developments have been capitalism, liberalism, and technological advances. Capitalism is widely considered to be the most efficient means of wealth generation, and of distributing goods and services (Todd, 2002 p. 63). Capitalism operates best when there are few or no restrictions upon the flow of capital investments, trade and the locating of businesses. Capitalism naturally veers towards operating upon a global basis to maximise opportunities and profits. TNCs have emerged especially in Asia, Europe, and North America as the spread of capitalism enabled them to expand across the globe. TNCs have made the best use of global media and advertising networks to sell their goods and services across the world to boost their sales and therefore their profits as well (Cameron, 1978 p. 1246). The reality now is that the increased globalisation of capitalism makes it much harder for governments to restrict the activities of TNCs. Whilst national governments may retain the legal and physical means to restrict or prevent developments they do not like, governments are increasingly less willing to do so (Warren, p. 83). As capitalism continues to develop the costs of restricting the expansion of the global economy are arguably higher than the consequences of having no restrictions at all. The reality is that globalisation has led to the emergence of regional trading blocs and organisations that are intended to allow free trade between the member states and fewer restrictions in trade with no-member states. Examples of such organisations include the European Union, the North American Free Trade Agreement, and the Asia Pacific Economic Co-operation (JONES, 2005). The economic, cultural, social and political impact of TNCs’ economic activities has assisted in the breaking down of trade barriers in order to increase their profits. It is the poorer and less developed nation states that find it harder to resist TNCs, as their governments are more likely to require investments and jobs (Weeks, 1996 p.100). Indeed TNCs have frequently built factories; sites or offices abroad to take advantage of lower wages and to enable them to evade import restrictions. TNCs such as Ford began that strategy as early as the 1920s, and governments have frequently welcomed TNCs into their countries because they bring financial investment and also create jobs. TNCs like MacDonalds, Tesco, and Wal - Mart tend to use local products, which can provide a boost for local producers. On the other hand TNCs have the ability to put local companies out of business. (Jun et al, 1993 p. 7). Without advances in information technology, transport and communications the economic, cultural, social and political impact of TNCs’ economic activities would have been greatly reduced. Enhanced technology means that capitalism can operate on a global scale with greater speed and efficiency, reducing the amount and the effectiveness of any restrictions that governments attempt to place on trade (Subasat, 2005). TNCs based in the United States, the European Union and Japan have been in a strong position to take advantage of globalisation. Some countries such as China, Singapore and South Korea have gained from the process, whilst for other developing countries, especially those in Africa the process has caused further damage to their long term development prospects. Enhanced technology has meant the globalisation of information, cultural influences, and ideological opinions. It has reduced the power of governments to exclusively shape and control the information provided to their populations (BLYTHMAN, J. (2004). The economic, cultural, social and political impact of TNCs’ economic activities has been to contribute to globalisation as a process, at the same time as making huge profits. The most successful TNCs such as the American group Wal-Mart and the British supermarket chain Tesco now have outlets worldwide and their decisions over what they do or do not buy can have detrimental consequences for farmers and manufactures alike. Hand in hand with truly global TNCs has come improved information technology and the increased influence of economic and political liberalism have increased the amount of globalisation (BLYTHMAN, 2004) However, the economic, cultural, social and political impact of TNCs’ economic activities has not had a uniform effect across the globe and it has not rendered national governments powerless. There are those that reject the spread of globalisation at least in its present form, although they would make use of the improved technology it brought about to launch alternative political, cultural, and economic values across the world (FISHMAN, 2006). Therefore to conclude without advances in information technology, transport and communications the economic, cultural, social and political impact of TNCs’ economic activities would have been greatly reduced. Enhanced technology means that capitalism can operate on a global scale with greater speed and efficiency, reducing the amount and the effectiveness of any restrictions that governments attempt to place on trade. At present TNCs based in the United States, the European Union and Japan have been in a strong position to take advantage of globalisation. TNCs such as MacDonalds, Tesco, and Wal- Mart have succeeded in spreading their businesses, stores, and franchises across the world, in the vast majority of countries their stores and sites have contributed to large company profits. Some countries such as China, Singapore, and South Korea have gained from the involvement of TNCs in terms of financial investment as well as job creation. However for other developing countries, particularly those in Sub-Saharan Africa the globalisation process has caused further damage to their long term economic and political development prospects. National governments, if not local populations have frequently welcomed TNCs into their countries because they bring financial investment and also create jobs. TNCs like MacDonalds, Tesco, and Wal - Mart tend to use local products, which can provide a boost for local producers. On the other hand TNCs have the ability to put local companies out of business. Bibliography BLYTHMAN, J. (2004) Shopped: The Shocking Power of British Supermarkets, London, Harper Collins DICKEN, P (2003) Global Shift, London: Sage Eatwell R & Wright A (2003) Contemporary Political Ideologies 2nd Edition, Continuum, London Evans G & Newnham J, (1998) The Penguin Dictionary of International Relations, Penguin, London FISHMAN, C. (2006) The Wal-Mart Effect, London: Penguin Allen Lane Gaddis J L, (2005) The Cold War, Penguin, London JONES, G. (2005) Multinationals and Global Capitalism, Oxford: OUP Subasat, T (2005), What is Globalisation and What is not?: A Political Economy Perspective, submitted to Capital and Class Tipton F B, (1998) The Rise of Asia – Economics, Society and Politics in contemporary Asia, Macmillan Press, Basingstoke Todd E, (2002) After the Empire – the breakdown of the American Order, Constable, London Read More