Download World economic Geography

Topic: Transnational Corporation
•
Group:
Nguyen Vu Hong Minh BAIU08019
• Tran Thi Lan Phuong BAIU08065
STATISTIC
OF TNCs
REVIEW
THE
IMPACT
OF TNCs
ON
WORLD
ECONOMY
TNCs IN
VIETNAM
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Principle of comparative advantage: “Two
countries can both gain from trade if, in the
absence of trade, they have different relative
costs for producing the same goods” ( David
Ricardo)
Transnational corporation: “corporations
which operate in more than one country or
nation at a time and have become some of
the most powerful economic and political
entities in the world today.”

In 1970, 7.000 TNCs
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In 2008:
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79.000 TNCs, more than 790.000 foreign
affiliates( UNCTAD)
Total sales of TNCs ~ $ 31 trillions
The value added ( Gross product) of foreign
affiliates worldwide ~ 11% of global GDP in 2007
The number of employees rose to some 82
million
 85
% TNCs in the Triad (European Union,
Japan and the United States), only 5% in
developing countries:
Six industries dominated: motor vehicles,
pharmaceuticals, telecommunications,
utilities, petroleum, electrical/electronic
equipment
 Top 100 TNCs account for 11 percent foreign
assets, 16 percent of total sales, 12 percent
of total employment.

“the productive core of the globalizing world
economy.”
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Foreign direct investment (FDI) : at least 75% of world flows
come from TNCs
International trade: 67% of all exports are directly related to
TNCs through intrafirm operations or trade with third parties
Evolution by region and country :
 In 1993, EU=37, US=32, Japan=21, others = 10
 In 2003: EU, more than 50% ; and the increase of
some developing countries.

Shifts across sectors: from the primary sector and
resource-based manufacturing to services and
technology-intensive manufacturing
Note:
1. In 1993, three industries (electronics & computers,
motor vehicles, and petroleum & mining) ~ 50 %
2. In 2003, they ~ 30%, all service ~ 25%
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investment and increased export income
introduce unavailable goods and services that are
essential for diversifying production
increase productivity of labor
stimulate local entrepreneurship
opportunity for technology transfer, leads to new
domestic industries
tax revenue for host government
economies of scale, exports more profitable and
competitive, increases national income
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introduce inappropriate products, technology, and
consumption patterns
labor-saving technology increases unemployment
Increase gap between rich and poor population
require the subsidiary to purchase inputs from the
parent company
hire the most talented entrepreneurs
limit the transfer of patents, industrial secrets, and
other technical knowledge to local subsidiary
Investing in few industries.

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In 2010, FDI- 25% GDP
Key economic and provinces: in the South( Ho
Chi Minh, Ba Ria- Vung Tau, Dong Nai, Binh
Duong, in the North( Ha Noi, Hai Duong, Vinh
Phuc, Hai Phong, Quang Ninh)
STRENGHS
WEAKNEESES
•Relative economic growth
•Increased investment and industry
•Good social index
•Stable political regime,
•Cheap labor, natural resource
•Strong domestic demand
•Investment Law Disappointed
result in FDI
•Insufficient investment in industry,
poor in infrastructure,
transportation, education.
•Economic Uncertainty
•Attach special importance to
oriented development
OPPORTUNITIES
THREATS
FDI is too much in the world
•Global financial
•WIPS Evaluation
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Foreign Investment agency
http://fia.mpi.gov.vn/
International Monetary Fund
http://www.imf.org/
United Nations Conference on Trade and
Development http://www.unctad.org/
http://www.vietpartners.com/