Globalisation impacts on trade, with many companies operating across borders.
Transnational corporations (TNCs) or multinational corporations (MNCs) are companies that operate in more than one country. Unilever, McDonalds and Apple are all examples of TNCs.
TNCs tend to have offices and headquarters located in the developed world. They often have factories in countries that are not as economically developed to take advantage of cheaper labour.
When a TNC locates within a country, there are advantages and disadvantages.
Advantages of TNCs locating in a country include:
Disadvantages of TNCs locating in a country include:
Transnational corporations are among the world's biggest economic institutions. Some experts suggest that the 300 largest TNCs own or control at least one-quarter of the entire world's productive assets. This is worth about US $5 trillion.
This demonstrates the sheer scale and influence of TNCs in world trade.
Some TNCs are able to exert influence over developing countries directly:
Some TNCs enlist the help of developed governments to further or protect their interests in developing countries. Sometimes this has involved military force.
In 1954, the USA launched an invasion of Guatemala to prevent the Guatemalan government from taking unused land from the United Fruit Company for redistribution to peasants.
TNCs are collectively the world's most powerful economic force, but no intergovernmental organisation is charged with regulating their behaviour. This naturally favours the developed world and inhibits developing countries' development.
International trade could be a powerful tool to end poverty. However, in reality, inequalities still exist in the international trading system.