Transnationalisation of Production and Financialisation

What is financialisaton and how does it affect economies differently?

Financialisation, is where the power of MNEs are intensified, through Neo-Liberal

Capitalisation as finance has become the dominant function in economies (Lapavitsas, C.

2012), this meant that the influence of MNEs have spread to other areas of society such as

political and social aspects.

This meant that companies switched from the old method of investing profits by reinvesting

and retaining into a new model that was mainly suited for the shareholders of a co-

operation where profits where now redistributed and downsizing was preferred instead of

reinvestment, This meant that world economies where shaped depending on how the

government of that country approached private funding from both national and

international companies, and to what degree the company has influenced changes in law

and actions it has taken on the natural resources and development of the community vary

from cooperation to corporation depending on its ethical and moral hierarchy, which again

changed due to maximise profits for shareholders due to financialisaton.

How can we best understand the transnational links between development, value creation

and wealth accumulation?

Transnational links between value creation and wealth accumulation, are mainly created to

benefit lead co-operations and governments, they do this by the use of tax havens and

chocking points, It is set out to exploit the labour force in developing countries. Value is

created in the secondary production sector where raw materials are converted into

products, the countries with the largest secondary sectors are developing countries (Li, Y.

and Zhou, W. 2021), and the secondary sector in certain developing countries are mainly

owned by multinational co-operations, which means the maximum amount of value is

extracted from the developing country by using its labour force and then later value is

added by research and development and marketing so the lead firm/ government can

capture the maximum amount of profit and hence gain the most amount of wealth.

The large capital owned by these firms are then distributed into tax havens which means

that the company can avoid tax, where the employee in both the developing country and

the host country are taxed easily due to government regulations and systems set in place to

do so efficiently. Another way the lead company/ governments can control product

development and competitor competition in the manufacturing company is by using

choking points, which is use consumer data to the advantage of the firm. By using these

methods large multinational companies/ governments are able to maintain power and

control in the global economy.

References

Lapavitsas, C. (2012) Financialisation in crisis. Brill (Historical materialism book series: 32).

Available at: https://search-ebscohost-com.liverpool.idm.oclc.org/login.aspx?

direct=true&db=cat00003a&AN=lvp.b3176522&site=eds-live&scope=site (Accessed: 10

March 2022).

Li, Y. and Zhou, W. (2021) ‘Knowledge mapping of Global Value Chain: A visual analysis using

VOSviewer and CiteSpace’, 2021 International Conference on Management Science and

Software Engineering (ICMSSE), Management Science and Software Engineering (ICMSSE),

2021 International Conference on, ICMSSE, pp. 77–85. doi:

10.1109/ICMSSE53595.2021.00025.