By Kanes
Globalisation refers to the growing economic interdependence of all countries in the world and integration of national markets into one global market through the increasing volume and variety of cross border transactions in goods and services, international capital and money movements and technology transfers. It is the internationalization of production, trade and investment as economic activity spills over national borders for market access, cost advantage and higher profit.

Transnational Corporations
The principal agents of Globalisation are transnational corporations which have an inherent tendency to expand their operations on account of rapid advances in technology and economies of large-scale production. The national market is too small to absorb all what they produce and what they save. Thus, they are constantly acquiring or merging with rival companies and opening sales outlets abroad to capture markets, relocating their industries to derive cost advantages and market access and investing their savings in money markets for higher profits. There are about 39,000 large transnational corporations in the world with about 270,000 affiliates and they are involved in as much as two-thirds of world trade, half of which is intra-firm trade and they control the bulk of international capital movements.

Transnational corporations are ubiquitous. There are those which concentrate on trade like Coca Cola, Pepsi Gola, McDonald Hamburger, Pizza Hut, Shell and Caltex, those that provide services such as Hilton, Inter-Continental, Holiday Inn Hotels, City Bank and American Express and others who are mainly manufacturing concerns such as Unilevers, British American Tobacco, Batas and Nestles. They compete with one another to expand their market share, and quite often acquire or merge with competitors, for example Boeing and McDonnell Douglas aircrafts, Microsoft and Apple computers, BMW and Chrysler, Volkswagen and Rolls Royce. In a period of rapid technological change, firms need to spend billions to stay competitive or increase their market share; mergers and acquisitions give them command over resources for this task while at the same time reducing competition.

They also do not hesitate to use their governments to open new markets. In 1994 for instance, Motorola influenced the US government to secure through official negotiations a market share in Japan for its cellular telephones. The US authorities frequently use Trade Law Super 301 to impose sanctions on countries which deny market access to American goods. Transnational corporations tend to undermine the sovereignty of national governments in economic matters. They influence governments with power lobbies and financial muscle and are the powers of the new millennium.

The larger transnational corporation are more powerful than most developing countries. Mitsubishi's sales in 1994 were $ 175.8 billion and General Motors' sales were $152.5 billion whereas the GDP of Thailand was $143.2 billion and of Sri Lanka $11.7 billion. To what extent they have globalized their operations is illustrated by the fact that McDonald Hamburger of USA has over 22,000 restaurants in over 105 countries and Pizza Hut has over 10,000 in 86 countries.

World markets are dominated by transnational corporations which largely determine the so called world market prices. Five megatransnational corporations have gathered over half the world market in key sectors such as aerospace, electrical equipment, electronic components and software, two in fast food and five in soft drinks, tobacco and beverages. The world tea market is also dominated by a few transnational corporations.

Unilever Group which has acquired so many rival groups like Liptons, Brook Bonds, Bushells (Australia), Salada (Canada) and Quality Tea (New Zealand) controls about 35 per cent of the world trade in tea; in addition it owns 17,533 hectares of tea in five different countries. Unilever and Allied-Lyons control about 53 per cent of the British tea market. The top 300 industrial transnational corporations account for 70 per cent of total foreign direct investment and control about 25 per cent of world's stock of productive assets. Thus, the world markets do not operate in idyllic competitive conditions as buyers and sellers do not have equal bargaining power.

Transnational corporations have become the major players in the world economic scene and Globalisation is to a great extent transnationalisation.

Foreign Direct Investment
Foreign direct investment is perhaps the most important function of transnational corporations. It has grown four times as fast as of world output and three times as fast as world trade. It is undertaken for internationalizing or transnationalising production by breaking up the production process into many geographically separated stages in a variety of locations, the labour-intensive stages being located generally in low-wage developing countries.

Modern communications and information technology have enabled them to coordinate production, exporting and marketing in industries in different locations. For example, Matushita Electric Company manufactures various parts and components of audio equipment in a number of countries: Singapore (transistor, switch, speaker and motor), Malaysia (variable resistance capacitor, tuner, electric capacitor), Philippines (electric capacitor), and Indonesia (speaker), for assembly in Indonesia, Philippines, Singapore, Taiwan and Thailand for export to North America, Europe, the Middle East as well as to supply the domestic markets. Japanese foreign affiliates in South Korea, Hong Kong, Taiwan and the ASEAN countries provided Japan with 12.7 per cent of her total non-oil imports in 1988. Nearly three quarters of Japanese imports from Asia in general machinery, electrical machinery, transportation machinery and precision equipment were supplied by Japanese foreign affiliates.

Transnational corporations globalize their operations both by establishing affilates and by sub-contracting for parts and components. The Mercedes Benz Company is a good example of this. It has located assembly plants in countries with good market prospects such as India, Indonesia, Malaysia, Philippines, Thailand and Vietnam and imports parts and components for assembly from affiliates and sub-contractors all over the world. The company's own plants produce about 40 per cent of the car: the engine, gearbox, axles and car body and imports the rest from sources outside: cable harnesses from Austria and Bulgaria, air ducts from Italy, heating and air-conditioning from France and Japan, wood for the interior from Canada and Rumania, circuit boards from Malaysia and Philippines, seat covers from Czech Republic and natural fibres from South-East Europe and Brazil. Thus, the Benz is truly a multinational car. Most of the garment factories in Sri Lanka are suppliers or subcontractors to transnational specializing in garments.

The extent to which transnational corporations have penetrated developing countries for trade, production, financial and other services is illustrated by the following figures of their presence in a few selected countries.

In Singapore, for instance, there are over 100,000 workers making electronic components in American owned factories to be shipped to the US.

Transnational corporations have taken the place of Chartered Companies like the East India Company which launched international integration of national economies in the fifteenth-sixteenth centuries with the rise of capitalism and overseas expansion through colonialism, and imperialism. Unlike in the past, however, they are being welcomed with the red carpet in developing countries for their capital, technology and marketing skills which developing countries need to develop their resources. They are no longer regarded as another form of imperialism to be avoided.

Globalisation is encouraged and supported by multilateral financial and trade institutions - the IMF, World Bank and the WTO. The developing countries are required by them to liberalize, deregulate and privatize their economies to facilitate trade and investment by transnational corporations. They are made to create an "enabling environment" to attract transnational corporations by the adoption of free market policies such as elevating private enterprise, privatizing State owned enterprises, eliminating State intervention, deregulating and decontrolling businesses, reducing budget deficits by cutting subsidies and welfare, lowering income taxes, adopting flexible labour policies, removing restrictions on foreign companies, liberalizing financial markets, foreign investment and foreign trade.

These policies are presumed to increase foreign investment, particularly to export-based industries, increase exports, raise economic growth and raise the living standards of the people. Thus, liberalization or opening the doors wide for foreign trade and investment is an integral part of globalisation.