84L4Nc Ol P4YMN1

1nL 8ALANCL CI AMLN1 IS A SUMMAk CI ALL 1nL IN1LkNA1ICNAL 1kANSAC1ICNS CI A CCUN1k AND I1S CI1I2LNS DUkING
A SLCIIILD LkICD CI 1IML
ACCCkDING 1C nAkVL AND ICnNSCN "1nL 8ALANCL CI AMLN1S ACCCUN1S ICk A CCUN1k SL1 CU1 IN SUMMAk ICkM
ALL 1nL CUkkLN1 AND CAI1AL 1kANSAC1ICNS WnICn nAVL 1AkLN LACL 8L1WLLN 1nL kLSIDLN1S CI 1nA1 CCUN1k AND
1nL kLS1 CI 1nL WCkLD IN A GIVLN LkICD CI 1IML"
IN 1nL WCkDS CI L1LkSCN " A NA1ICN'S IN1LkNA1ICNAL LCCNCMIC 8ALANCL INVCLVLS ALL 1nL IN1LkNA1ICNAL LCCNCMIC
1kANSAC1ICNS 1nA1 kLSIDLN1S CI CNL NA1ICNS LN1Lk IN1C WI1n 1nL kLSIDLN1S CI ALL C1nLk NA1ICNS CI 1nL WCkLD
DUkING SCML SLCIIIC LkICD CI 1IML"
I1 MA 8L DLIINLD IN A S1A1IS1ICAL SLNSL AS AN I1LMI2LD ACCCUN1 CI 1kANSAC1ICNS INVCLVING kLCLI1S IkCM
ICkLIGNLkS CN 1nL CNL nAND AND AMLN1S 1C ICkLIGNLkS CN 1nL C1nLk SINCL 1nL ICkMLk kLLA1L 1C 1nL
IN1LkNA1ICNAL INCCML CI A CCUN1k 1nL AkL CALLLD 'CkLDI1' AND SINCL 1nL LA11Lk nAVL 1C CU1GC 1nL AkL CALLLD
'DL8I1S'
8kP
nLkL 8 DLNC1LS 1nL 8ALANCL CI AMLN1S k DLNC1LS 1C1AL kLCLI1S AND kLkLSLN1 1C1AL AMLN1S 8C1n 1C1AL
kLCLI1S AND AMLN1S CAN 8L SU8DIVIDLD IN1C DCMLS1IC AND ICkLIGN kLCLI1S AND AMLN1S
ASSUMING 1nA1 DCMLS1IC kLCLI1S AND DCMLS1IC AMLN1S AkL LUAL 1nL 8ALANCL CI A1MLN1S CAN 8L S1A1LD AS
8kff
cOMPONN15
1nL USA 8ALANCL CI AMLN1S ACCCUN1 CCNSIS1 CI 1nkLL ACCCUN1S
1n cukkN1 4ccOuN1
1n c4Pl14L 4ccOuN1
1n 4ccOuN1 Ol llN4NclN6 Ol ullcl1 Ok 5ukPLu5

1n cukkN1 4ccOuN1
1nIS SLC1ICN CI 1nL 8ALANCL CI AMLN1S kLCCkDS ALL CUkkLN1 1kANSAC1ICNS WnICn INVCLVL LI1nLk 1nL
LkCk1 Ck IMCk1 CI GCCDS AND SLkVICLS 1nL GCCDS LkCk1LD AkL 1LkMLD AS "VISI8LL" LkCk1S 1nL SLkVICLS
LkICkMLD ICk 1nL LCLL CI C1nLk CCUN1kILS CN 1nL C1nLk nAND AkL CALLLD AS 1nL "INVISI8LL" LkCk1S
x4MPL
1SnIING 28ANkING AND INSUkANCL 3LkLNDI1UkL CN DILCMA1IC SLkVICLS 41CUkIS1 LkLNDI1UkL
SIN1LkLS1 6kCII1S AND DIVIDLNDS IkCM CVLkSLAS INVLS1MLN1
c4Pl14L 4ccOuN1
1nL CAI1AL ACCCUN1 INCLUDLS ALL 1kANSAC1ICNS INVCLVING 1nL LLNDING Ck 8CkkCWINGS CI CAI1AL CI 8C1n
SnCk1 AND LCNG MA1UkI1ILS AND 8ASICALL kLILLC1S 1nL NL1 CnANGL DUkING 1nL ACCCUN1ING LkICDS IN 1nL
IINANCIAL CLAIMS AND LIA8ILI1ILS CI DCMLS1IC CI1I2LNS 8USINLSS IIkMS Ck IINANCIAL INS1I1U1ICNS VISAVIS 1nL
kLS1 CI 1nL WCkLD
1n 4ccOuN1 Ol llN4NclN6 Ol 5ukPLu5 Ok ullcl1
1nL DLIICI1 CN CUkkLN1 ACCCUN1 AAk1 IkCM 1nL SnCk1 Ck LCNG 1LkM CAI1AL MCVLMLN1S MA 8L ADIUS1LD
1nkCUGn 1nL 1kANSAC1ICNS INVCLVING 1nL SALL CI GCLD SINCL GCLD IS UNIVLkSALL ACCL1LD 8 1nL NA1ICNS
IN 1nL SL11LLLMkN1 CI 8ALANCLS 1nL GCLD SLLLING 1C LkCk1ING CCUN1kILS CAN C81AIN 1nL NLCLSSAk
AMCUN1 CI ICkLIGN LkCnANGL ICk DISCnAkGING 1nLIk ICkLIGN LIA8ILI1ILS 1nL DLIICI1 MA ALSC 8L CCVLkLD 8
1nL DCMLS1IC LCCNCM LI1nLk 8 DkAWING CN 1nL kLSLkVLS Ck 8 8CkkCWING IkCM 1nL IMI Ck C1nLk
SCUkCLS A8kCAD

1n M4lN l1M5 lN c45 Ol u54 8OP 4ccOuN1
cukkN1 4ccOuN1
MLkCnANDISL 1kADL 8ALANCLLkCk1SIMCk1AN1SC1nLk SLkVICLS8ALANCL CN GCCDS AND SLkVICLS (
1+4+S)UNILA1LkAL 1kANSILk kIVA1L AND GCVLkNMLN18ALANCL CI CUkkLN1 ACCCUN1 (6+7)

8 c4Pl14L 4ccOuN1

l u5 ulkc1 lNv51MN1 48kO4ulOkl6N ulkc1 lNv51MN1 lN 1n u54u5 N1 Pukcn455 {) Ol lOkl6N
5cukl1l5lOkl6N N1 Pukcn455 {+) Ol u5 5cukl1l584Nk kPOk1u cL4lM5 ON lOkl6Nk5 4Nu
O1nk584L4Nc ON c4Pl14L 4ccOuN1 {9+10+11+12+1l+14)5141l51lc4L ul5ckPNcY
1O14L 1O 8 Oll51 {8+14+15)
c 8o/oncinq items
l lOkl6N Olllcl4L5 45515 lN 1n u54
ll u54 Olllcl4L5 k5kv 455515
lll u54 6OvkNMN1 45515 O1nk 1n4N Olllcl4L5 k5kv 45515
lv Ovk4LL 84L4Nc

1n M4lN l1M5 lN c45 Ol lNul45 8OP 4ccOuN1
4 cukkN1 4ccOuN1
l Mkcn4Nul5
ll NONMON14kY 6OLu MOvMN1
lll 1k4vL
lv 1k4N5POk141lON
v lN5uk4Nc
vl lNv51MN1 lNcOM
vll Ml5cLL4NOu5
vlll 1k4N5lk P4YMN15
lx 1O14L cukkN1 1k4N54c1lON5

8 c4Pl14L 4ccOuN1
l Pklv41
ll 84NklN6
lll Olllcl4L

ulllkNc 81wN 8OP 8O1
1n 84L4Nc Ol 1k4u l5 1n ulllkNc 81wN 1n xPOk15 4Nu lMPOk15 Ol cOMMOul1l5 4LON
ON 1n O1nkn4Nu 1n 8OP klk5 1O 1n 1O14L ckul15 4Nu u8l15 ON 4ccOuN1 Ol 4LL 1n cOMMOul1l5 4Nu
5kvlc5 1n41 1n uOM51lc cONOMY kclv5 lkOM 1n k51 Ol 1n wOkLu Ok P4Y5 1O l1
wnY 8OP l5 1kMu 45 cONOMlc 84kOM1Ok Ol 4 cOuN1kl5 cONOMlc Lll ?
8OP kv4L5 1O 1n 6OvkNMN1 1n 1ku lN1kN41lON4L cONOMlc PO5l1lON Ol 1n cOuN1kY 1n 6OvkNMN1 lN
1n Ll6n1 Ol 1n cn4k65 lN cukkN1 4ccOuN1 c4Pl14L 4ccOuN1 4Nu 1n 4ccOuN1 Ol llN4NclN6 c4N 14k
4PPkOPkl41 MON14kY 4Nu ll5c4L ucl5lON5 1O kc1llY 4NY uNu5lku llc1 Ol P4YMN15 5ukPLu5 Ok ullcl1 ON 1n
cONOMlc 5Y51M
l1 l5 4L5O PO55l8L 1O M45uk 1nkOu6n 1n cn4N65 lN 1n P4YMN15 PO5l1lON 1n lNlLuNc Ol lN1kN41lON4L
1k454c1lON5 ON 1n LvL Ol N41lON4L lNcOM 4Nu xPNul1uk lN 1n c45 Ol Luc 1n 84L4Nc Ol P4YMN15 ullcl1
wlLL 5nOw 1n x1N1 1O wnlcn l15 uvLOPMN1 PkO6k4MM n45 1O uPNu uPON 1n llN4Ncl4L 455l514Nc lkOM
1n 4uv4Ncu c4Pl14L LNulN6 cOuN1kl5
c4N w 54Y 8OP 5nOw5 ulkc1LY 1n PkO5Pkl1Y Ok POvk1Y Ol 4 cOuN1kY?
NO
4 84L4Nc Ol P4YMN15 5ukPLu5 l5 NO1 4 5OuNu PkOOl Ol 1n cONOMlc PkO5Pkl1Y Ol 4 cOuN1kY NOk l5 1n
84L4Nc Ol P4YMN15 ullc15 4 5l6N Ol cOMP1l1lv lN4uu4cY Ol 4 cOuN1kY
4 POOk cOuN1kY M4Y n4v 4 8OP 5ukPLu5 ON 4ccOuN1 Ol 4 vkY 5l248L lNlLOw Ol lOkl6N LO4N5 4Nu ul1Y
c4Pl14L 5lMlL4kLY 4 uvLOP cOuN1kY Llk u54 M4Y n4v 4 8OP ullcl1 NO1 8c4u5 l15 cOMP1l1lv c4P4cl1Y n45
u1klOk41u Ok 1n41 l15 xPOk15 Ol vl5l48L 4Nu lNvl5l8L5 n4v uOwN 8u1 8c4u5 1n cOuN1kY Ml6n1 n4v
uNuk14kN 4 M455lv 455l514Nc PkO6k4MM lOk 1n POvk1Y51klckN cOuN1kl5 Ol 1n wOkLu









6/obo/itotion
6/obo/itotion hos mony definitions but qenero//y it refers to vorious 6/obo/ lnterconnections1he interconnections exist ocross o
voriety of humon octivities
W conomic5ocio/Po/itico/cu/turo/8io/oqico/

controdictions in 6/obo/itotion
6/obo/itotion hos mony inherent controdictions inc/udinq
W lt inteqrotes ond disinteqrotes
W lt fosters cooperotion ond conf/ict
W lt enqenders order ond disorder
W lt is divisive ond unifyinq
5ome view it os o net positive others os o net neqotive5o for q/obo/itotion hos hod both positive ond neqotive effects on
q/obo/ peoce conomic 6/obo/itotion lncreosinq conomic lnterconnectivity
W lnternotiono/ division of /obor
W kopid/y expondinq vo/ume of copito/ f/ows
W copito/ remoins concentroted omonq the weo/thiest notions Mixed evidence os to the effect of
economic q/obo/itotion
W unsure whether it exocerbotes or reduces economic inequo/ity
W conomic interdependence is re/oted to more peocefu/ re/otions but those /eft behind tend to be resentfu/
Po/itics ond 6/obo/itotion Notion stotes ore /ess ob/e to contro/ socio/ ond economic events within their
1erritory 6/obo//reqiono/ decisionmokinq bodies {uN u etc) ore risinq in importonce
but
W 1hey ore not yet fu//y democrotic/occountob/e Pressures on qovernments to intervene on humon riqhts vio/otions
lnternotiono/ nonstote octors hove qoined power 1echno/oqy ond 6/obo/itotion lncreoses occess to informotion but
W 4ccess is uneven/y distributed
W nos mode it eosier to seek out /ikeminded voices ond ovoid opposinq viewsMokes survei//once ond certoin types of contro/
eosier cu/turo/ 6/obo/itotion lncreoses exposure to foreiqn ideos ond proctices but
W cu/turo/ exports ore disproportionote/y from western countries porticu/or/y the u5
W ln some coses hos resu/ted in "commodititotion" of cu/tures
5ome ethnic ond re/iqious qroups fee/ cu/turo//y threotened by q/obo/itotion
W nos resu/ted in o shorp increose in reoctionory "notiono/ist" ond "fonotico/" qroups
nos "ki//ed" some cu/tures
6/obo/itotion ls nere to 5toy!
6/obo/itotion does hove prob/ems ond neqotive effects but it is not qoinq to disoppeor 5owe need to /eorn how to reop
its benefits ond minimite its costs 1o dothot we must
W understond its impocts
W work to remedy the prob/ems
W work to spreod the benefits os wide/y os possib/e
6/obo/ mu/tinotiono/ internotiono/ ond tronsnotiono/ componies
W c/ossifyinq four types of compony operotinq foreiqn interests
q/obo/ mu/tinotiono/ internotiono/ tronsnotiono/ componies
1he 6LO84L co loponese firms os koo ond Nc centro/ites key functions inc/udinq morketinq ond finonce
neodquorters produce the new techno/oqy ond disseminotes it to subsidiories
cost odvontoqes ore ochieved throuqh economies of sco/e q/obo/sco/e operotions
1he need for efficiency economies of sco/e meons thot products ore deve/oped thot exp/oit needs fe/t ocross the ronqe
of countries
5pecific /oco/ needs tend to be iqnored
neodquorters of lN1kN41lON4L co retoins considerob/e contro/ over subsidiorys monoqement systems morketinq
po/icy but /ess so thon in the q/obo/ compony
W Products techno/oqies ore deve/oped for the home morket extended to other countries with simi/or morket
chorocteristics diffused e/sewhere ond the deve/opmento/ sequence is decided on the bosis of monoqinq the product
/ifecyc/e os efficient/y f/exib/e os possib/e

1he 1k4N5N41lON4L compony evo/ved in the 1980s in response to environmento/ forces simu/toneous demonds for
q/obo/ efficiency notiono/ responsiveness ond wor/dwide /eorninq
1ronsnotiono/ mode/ combines feotures of mu/tinotiono/ q/obo/ ond internotiono/ mode/s 4 product is desiqned to be
q/obo//y competitive ond is differentioted ond odopted by /oco/ subsidiories to meet /oco/ morket demonds
whereos the internotiono/ compony oriqinotes the product in the heodquorters country then tronsfers it to the
subsidiory the tronsnotiono/ miqht reverse this process kesources inc/udinq techno/oqy / monoqerio/ to/ent miqht be
distributed omonq subsidiories inteqroted between them throuqh stronq interdependencies
1 LOw M4k6lN4L cO515