Economic Flows and Global Networks
The modern world runs on global flows - the movement of people, money, goods, and ideas across borders. Foreign Direct Investment (FDI) is massive money flowing between countries, with the USA receiving the most inflows whilst Japan, USA, China, and Germany have the highest outflows.
TNCs drive globalisation through outsourcing (hiring other companies for services) and offshoring (moving production to cheaper countries). Apple manufacturing in China is a perfect example - it creates jobs and introduces new technology but can destroy local businesses.
The benefits of TNCs include employment opportunities, increased exports, technology transfer, and the positive multiplier effect that boosts entire economies. However, they also cause local business closures and can make countries too dependent on foreign investment.
Trade blocs create economic benefits like free internal trade, lower import costs, and support for weaker member countries. But they freeze out non-members and protect businesses from potentially cheaper competition outside the bloc.
Exam Focus: You'll need to evaluate both costs and benefits of globalisation - it's rarely completely positive or negative.
The "shrinking world" concept explains how technology has made distances meaningless. Communication speeds boomed in the 1960s, containerisation revolutionised shipping, and Special Economic Zones offer tax incentives that attract massive investment.