Globalization and Multinational Corporations

Globalization Overview

• Globalization connects the world into a large marketplace through trade.
• Multinational corporations (MNCs) standardize products for global appeal.
• MNCs benefit from cost-effective resources in various countries.
• Example companies: Apple, Coca-Cola, McDonald's, Microsoft, Nike.

Factors Leading to Globalization

• Saturated domestic markets push businesses to seek growth abroad.
• Increased consumer demand and awareness encourage diversity in offerings.
• Low labor costs in countries like India attract MNCs.
• Decreased transport costs and improvements in logistics facilitate global trade.
• Advances in ICT aid business integration into global markets.
• Economies of scale lead to lower production costs and higher competitiveness.
• Trade organizations reduce barriers like tariffs and quotas.

Positive Impacts of Globalization

• Job creation in developing countries and technology transfer.
• Economic growth by reducing poverty levels.
• Increased competition lowers prices and enhances consumer choice.
• Improved diplomatic relations and cultural exchange between nations.

Negative Impacts of Globalization

• The wealth gap widens, benefiting skilled labor and MNCs at the expense of low-skilled workers.
• Environmental degradation linked to economic growth.
• Local economies may deteriorate as profits are repatriated.
• Outsourcing jobs to lower-cost countries can lead to domestic unemployment.

Multinational Corporations (MNCs)

• Defined as companies operating in multiple countries with a centralized HQ.
• Engage in foreign trade, licensing, joint ventures, and establish subsidiaries.
• MNCs aim for market expansion, cost reduction, and competitive advantage.

Foreign Direct Investment (FDI) in Ireland

• FDI has boosted Ireland’s economy by creating jobs and increasing export levels.
• IDA Ireland attracts foreign investment crucial for economic growth.
• Challenges include housing pressures, tax evasion, and economic dependency.

European Union Membership

• Offers free trade, market access, and economic support but includes regulatory costs.
• Single Market allows easy trade and movement for Irish firms.
• Cooperation with the EU provides benefits in agriculture and infrastructural development.

Brexit Implications

• Brexit affects trade relationships and economic stability in Ireland significantly.
• Potential drop in Irish exports to the UK due to increased costs.
• Some firms may relocate to Ireland to maintain EU market access.
• Labor market fluctuations could occur due to changes in export demand.