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