SAJC Cluster 1.2 Lecture 12 Notes (The Geography of the Global Economy and TNCs)

St Andrew’s Junior College H2 Cluster 1: Development, Economy and Environment H2_Cluster 1_Lecture 12_2025/pg 1 Lecture 12 Geography of the Global Economy and Transnational Corporations (TNCs) KEY QUESTION: How do TNCs connect the global economy and impact places? With the completion of this lecture, attached readings and tutorial, you should be able to discuss how: - the global production networks of TNCs connect places within the global economy; and - TNCs’ global production networks impact home and host economies. Lecture Outline 12.1 Introduction: The Transnational Corporation 12.2 What motivates firms to transnationalise? 12.2.1 Market-seeking 12.2.2 Asset-seeking (a) Access to knowledge (b) Access to labour 12.3 How do firms transnationalise? 12.4 What is the structure of TNCs? 12.5.1 Headquarters: Centres of strategic control and coordination 12.5.2 Research and Development Centres 12.5.3 Branch Offices: Marketing and Sales 12.5.4 Branch Plants: Manufacturing 12.5 What are some examples of GPNs? 12.6 What is the impact of TNCs’ global production networks on host countries? 12.6.1 Socio-economic Impact 12.6.1.1 Pros for Host Countries 12.6.1.2 Cons for Host Countries 12.6.2 Environmental Impact 12.7 What is the impact of TNCs’ global production networks on home countries? 12.8.1 Socio-economic Impact 12.8.2 Environmental Impact 12.8 Concluding remarks on TNC’s impacts on countries in which they operate Readings: • After Indonesia retreat, GM retrenches in Thailand too, CNA, 27 Feb 2015 • GM reopens regional HQ here, CNA, 8 Aug 2014 • Nike: A Case Study

St Andrew’s Junior College H2 Cluster 1: Development, Economy and Environment H2_Cluster 1_Lecture 12_2025/pg 2 Many of us are consumers of Nike products. Beyond donning Nike shoes or apparel, we can use geographical lenses to help us understand the operations of Nike. What does its produce its merchandise, how did it become as such, and should we be concerned about it? Cartoon showing the unpleasant conditions Nike has been accused of allowing workers responsible for its products to operate in. 12.1 Introduction: The Transnational Corporation A transnational corporation (TNC) are major business organisations with the power to coordinate and control operations in more than one country. • The significance of the TNC lies in three basic characteristics: i. its ability to coordinate and control various processes and transactions within production networks, both within and between different countries ii. its potential ability to take advantage of geographical differences in the distribution of factors of production (for example, natural resources, labour, capital) and in state policies (for example, taxes, trade barriers, subsidies etc.) (see Lect 12 on Role of the State) iii. its potential geographical flexibility – an ability to switch and re-switch its resources and