SAJC Cluster 1.2 Lecture 13 Notes (Role of Actors in Shaping the Economy Pt.1)

St. Andrew’s Junior College H2 Cluster 1: Development, Economy and Environment H2_DEE_lecture13_2025/pg 1 Lecture 13 Relative Role of Actors in Shaping the Global Economy (I): Role of the State KEY QUESTION: Can states influence economic activities? With the completion of this lecture, attached readings and tutorial, you should be able to discuss the: - influence of states on TNCs’ operations through their role as regulators of economic activities; and - varying degree of states’ influence over the operations of TNCs Lecture Outline 13.1 Introduction 13.2 How Do States Regulate Economic Activities? 13.3 How Does the Regulation of Economic Activities by A State Influence TNCs? 13.3.1 Trade policies 13.3.2 Foreign Direct Investment (FDI) strategies Example 1: Economic Clusters Example 2: Export Processing Zones Box 1: The Development of Special Economic Zones in China 13.3.3 Labour market strategies 13.3.4 The State as a Business Owner: State-owned enterprises (SOEs) 13.3.5 Hold TNCs Accountable for Wrongdoings 13.5 Conclusion Box 2: Singapore – case study Box 3: China – case study An artist's impression of the Jurong Innovation District (JID) in Jurong West. The 600-ha JID is a recent and large scale example of the Singapore government’s effort to stimulate manufacturing in new growth areas, such as advanced manufacturing, robotics, urban solutions, cleantech and smart logistics. To date, despite the pandemic, JID has attracted close to $2 billion in private investment. Among the entrants are major players in the advanced manufacturing sector, including: Hyundai Motor Group, Konica Minolta, Nvidia, and Omron. The effort here is an example of a state taking steps actively to provide key infrastructure that will enable the country to attract FDIs from TNCs, so as to remain competitive and to upgrade or strengthen the local talent pool. How else does a state influence TNCs?

St. Andrew’s Junior College H2 Cluster 1: Development, Economy and Environment H2_DEE_lecture13_2025/pg 2 13.1 Introduction • In Lecture 12, we learnt that the GPNs of TNCs contribute to flows of trade, capital and labour, which connect different places in the global economy. Such connection also contributes to interdependence. In tutorial, we learnt that the flows of trade, capital and labour are uneven, resulting in different impacts on home countries, as well as host countries in different macr o- regions. • In Lecture 13 , we will find out how states can also shape the global economy through their influence on TNCs. This is because a state very often does not directly participate in the economy, as its role is largely in governing a country. However, the policies, initiative s and measure s adopted by states can affect TNCs’ locational decisions, thereby affecting their GPN s and how TNCs connect places in the global economy. States can also affect how TNCs behave in the ir count