Globalisation refers to the process of increasing interconnectivity and interdependence of the world’s markets, cultures, and societies. It involves the free flow of goods, services, capital, people, and information across borders, resulting in a more integrated global economy. Globalisation is facilitated by advancements in technology, communication, and transportation, which have made it easier for people and businesses to connect globally.
Foreign Direct Investment (FDI):
FDI is an investment made by a company or individual in one country into assets or operations in another country. This can include establishing business operations like subsidiaries or joint ventures or acquiring a controlling stake in an existing foreign company. FDI plays a crucial role in globalisation by fostering economic growth, transferring technology, and creating jobs in host countries.
For example, multinational companies like Apple or Toyota set up manufacturing plants in developing nations to take advantage of lower labor costs and access new markets. This not only helps the host country’s economy but also integrates it into the global market, enabling both the investor and the host country to benefit.
Transnational Corporations (TNCs):
A TNC is a corporation that operates across multiple countries, with its headquarters typically in one country while its subsidiaries, branches, or affiliates are located in others. TNCs dominate many industries, including technology, automotive, and retail, and are a driving force behind globalisation. These corporations shape global trade by expanding their production, marketing, and distribution networks worldwide. Examples of TNCs include companies like McDonald’s, Microsoft, and Nestlé.