Thursday, September 26, 2019

Global Economy and Transnational Corporations Essay

Global Economy and Transnational Corporations - Essay Example If Reich’s theory is valid, then the role of the government is creating competitiveness for the nation is by being the custodians of the economy as opposed to being just regulators. In this case, the government must seek to develop the national capital through promoting education and through policies. Peter Dicken (2010) however seems to disagree with Reich’s look of the global economy and argues that the global economy can be measured by the way the multinational or transnational firms are operating. He argues that TNC (Transnational Corporations) are the barometers for a global economy. The dilemmas with this theory are that it does not take into attention some factors such as these multinationals do not necessarily pledge their economic allegiance to the nations where they are, but only consider where their best interest is safeguarded. However, it is important in that the presence of a multinational in a country may be an indication of an economy that is doing well. A good example can be seen in China and India which are doing very well economically after so many western multinationals moved their business to these nations. If this theory is valid, then it means that the role of the government is regulatory as opposed to being the custodians of the economy. Alfred Chandler (1977) seems to be in congruence with Peter Dicken. This is because he argues that the world economy is affected by the hierarchy of management in private businesses. This is also contrary to what Robert Reich postured with regard to the wealth of nations, or work of nations. According to Alfred Chandler, the middle management has converted Adam Smith’s invisible hand into a visible hand and now the wealth of nations is not created from the invisible hands that amount from everyone in the economy working together, but that the middle management in firms is the ones who drive the wealth of nations. The advantage of this theory is that it may not explain some situations such as in developing nations where the economy and industries are not as structured as in the developed nations.  Ã‚  

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