How do TNCs dominate and control the world market

How do TNCs dominate and control the world market

We currently live in a society in which you can find increasingly more transnational companies (TNCs) that now represent the majority of the trades on the world’s market. Thanks to two documents, we will be able to know a little more about them. The former one is a cartoon drawn by a famous american cartoonist named Andy Singer, who often denounces the flaws of society throughout his drawings. In this case he mocks the fact that from the day we open our eyes for the very first time until we die, TNCs are omnipresent in our lives. It was published on the website Politicalcartoon.com on the 15th of December 2016. The latter document is a sample of an article that was published in The Economist, a famous british quality newspaper. Our document, that is tackling the importance of TNCs in the global market, is derived from The Economist’s issue of december the first 2015. Before going further into the topic, it is of the utmost importance to clearly understand what a transnational company and the world market are. As you can guess, a transnational company is a firm that operates across borders, although it often has headquarters in the country in which it was originally created. In other words, to be considered a TNC, a company has to have facilities in several countries. Then, the global market gathers every single purchase and sale throughout the whole world. Now that everything is clearer in our minds, we can wonder how these special companies dominate and have power over the global market. First and foremost, we will see that although TNCs started growing in the 70’s, they are nevertheless becoming increasingly powerful, thanks to a liberal economy. We will then focus on how they are now affecting basically every country. To conclude, we will discuss the cultural impact they have on us, the consumers.

I- A new actor growing in the 70’s yet still getting more and more powerful

First of all, let’s go back in time and take a look at how the world market used to be: from the beginning up until the end of the glorious thirty (that is to say between the end of WWII and the early 70s) people witnessed an important economic growth in many countries. However, at some point those same countries suffered from a decrease in economic growth, as well as from a blow up in inflation and unemployment rates. They needed a silver bullet, and that is where economic liberalization came into play, as it allowed companies to widen their activities. According to the second document: “Falling trade barriers have been part of a larger economic liberalization story that has further propelled companies to operate and compete abroad”. And that is how it all started.

From this point, companies, that used to be mainly local and national, started spreading their activities worldwide. As explained in the second document, the only international firms you could find at the time were mainly settled abroad by necessity such as “resource-seeking” whereas today the motivations vary. Moreover, it is important to note that the international spreading of TNCs was rendered possible by the development of transportation and communication technologies. Nowadays, companies have the choice : They can, on the one hand, choose to instal facilities in developed countries to have more efficient and educated workers, or on the other hand, choose to settle in developing ones, where wages and work conditions are undeniably lower, to acquire cheap labor force. Companies can henceforth aspire to a profit maximisation regardless of where they were created.

Ever since the emergence of TNCs, some of them stood out of the crowd: they became bigger than others, made more profit, and became more and more famous all around the world. Among them, we can find for instance the GAFAM (Google Apple Facebook Amazon and Microsoft), the five biggest TNCs in the world. Together, they represent thousands of billions of dollars, and their profits exceed the GDP of countries such as Germany, France or the United Kingdom. In that way, it is pretty easy to understand how powerful they are, as well as why countries want them to build facilities on their lands so bad.

II-

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