Just Sociology

The Power of Global Corporations vs Nation-States: A Symbiotic Relationship

Global corporations have long been recognized as powerhouses of economic activity, with their revenues often exceeding those of countries themselves. It is not unusual to hear about corporations like Walmart, Toyota, Royal Dutch Shell, and Apple enjoying annual revenues that eclipse the gross domestic product (GDP) of many nations worldwide.

This article aims to examine the revenue of top global corporations, compare it with countries’ nominal GDP, and discuss the composition of the UK economy in relation to the top UK companies.

Top 10 global corporations by revenue

The Fortune Global 500 is an annual ranking of the world’s largest corporations by revenue, with Walmart holding the top position in 2020. State Grid, Sinopec, China National Petroleum, and Toyota Motor followed closely, with Volkswagen, Royal Dutch Shell, Berkshire Hathaway, Apple, and Exxon Mobil completing the top ten.

Walmart had a revenue of $523.96 billion, while Exxon Mobil came in tenth with $264.94 billion. The top 10 global corporations’ revenues are so massive that they can directly affect national economies.

For instance, Walmart’s revenue surpasses Belgium’s GDP ($509.9 billion) and twice Portugal’s GDP ($231.1 billion). Exxon Mobil’s revenue is more than four times the GDP of Iceland ($71.1 billion).

Countries ranked below the top 10 global corporations by nominal GDP

There are several countries worldwide with a nominal GDP ranking below the top ten global corporations. Poland, with a nominal GDP of $595.1 billion, is ranked 23rd worldwide.

Denmark follows with a nominal GDP of $306.3 billion, ranked 59th worldwide. Other countries include Chile with a GDP of $247.7 billion, Finland with a GDP of $236.5 billion, Netherlands with a GDP of $907.5 billion, and Portugal with a GDP of $231.1 billion.

While some of these countries’ GDPs may seem significant, they pale in comparison to the revenues of the top 10 global corporations. Walmart’s revenue is over 882 times that of Portugal’s GDP, while Exxon Mobil’s revenue is more than 107 times that of Iceland’s GDP.

Comparison of population countries’ economic power to corporations

It is no secret that countries with larger populations tend to have a more significant economic power than those with fewer residents. Western European countries like Germany, France, Italy, and the UK remain economic powerhouses globally because of their large populations.

However, the combined revenue of Western European countries does not surpass that of the top transnational corporations (TNCs). Africa, with a population of over one billion people, has only three countries Nigeria, Egypt, and South Africa with a nominal GDP above that of the top 10 global corporations.

The revenue of TNCs leaves countries with fewer resources to compete with them. Still, it is essential to note that countries have other resources that are not accounted for in nominal GDP, such as natural resources, a competent workforce, and an environment conducive to business.

Top 10 UK companies by revenue

The UK economy is the sixth-largest economy globally and the second-largest economy in the European Union, making it a significant market for businesses. BP holds the top position in the UK by revenue, followed by Legal and General Group, Prudential, HSBC Holdings, Aviva, Tesco, Lloyds Banking Group, Vodafone Group, Unilever, and SSE.

BP reported 174,431 million revenue in 2019, nearly 20,000 million more than Legal & General Group, the second-largest UK company by revenue. The collective revenue of the top 10 companies, 796,708 million, accounts for over 25% of the UK economy and underscores the importance of these corporations to the UK’s economic stability.

Composition of UK economy

The UK economy comprises various sectors, including finance, tangible products, communications, energy, retail, and many others. Finance companies are among the top revenue earners in the UK economy, with Barclays, Lloyds, HSBC, and Standard Chartered making the top 20 companies in the UK by revenue.

Tangible products comprise firms producing household goods, construction materials, industrial goods, and other commodities, while communication companies primarily produce software, enabling communication platforms, and IT services. Companies like Vodafone, BT Group, and telecoms giant O2 generate significant revenue in this sector.

Finally, the energy sector is also a crucial part of the UK economy, contributing over 1% of GDP in 2019. Companies like BP, Shell, and National Grid are among the top 10 earners by revenue, emphasizing the crucial role of the energy sector in the UK economy’s sustainability.

Conclusion

Corporations generate massive revenues that often exceed the GDP of many countries worldwide. While their contributions to the global economy cannot be overstated, it is worth noting that countries have other resources that can improve economic competitiveness.

The UK economy comprises various sectors, including finance, tangible products, and energy, showing vast investments in various sectors to foster growth.The power of corporations compared to nation-states has been a subject of significant debate for decades. While nation-states wield political power at the national level, corporations’ power manifests on a global scale in the economic, social, and political spheres.

In this article extension, we will discuss the power of TNCs compared to nation-states, examining their relationship and the key factors that underpin their power. Comparison of TNCs and countries’ power

The power of TNCs can be viewed in several ways.

They are typically larger than many nation-states, have significant economic influence, and possess a considerable amount of social influence. Even governments must rely on TNCs to some extent, given their ability to influence economies worldwide.

One of the critical ways in which TNCs exercise their power is through tax avoidance or evasion. TNCs have become increasingly adept at exploiting loopholes in the complex legal tax regime, thus minimizing their tax liability.

This lack of charitable contribution can make them more profitable and immensely wealthy, giving TNCs a significant economic edge over nation-states that operate within the constraints of various tax regulations. Moreover, the power of TNCs also manifests itself through the ability to wield political influence, even becoming more powerful than the governments of some smaller countries.

Indeed, in recent years, TNCs have become increasingly politicized, engaging in activities such as lobbying and campaign funding and even creating policies through pressure groups. The control of TNCs may extend to a point where some have the power to depose governments through the spreading of information or even promoting violence.

For instance, the USAs Delta Force, a US military special operations unit, was created at the behest of Exxon Mobil, which sought to protect its interests by giving the military a mandate to remove the pro-nationalization government of Sudan. Similarly, in China, TNCs have hired their paramilitary forces to control the labor force, often abusing employees through violence and intimidation tactics.

African countries, whose economies and societies have been heavily impacted by TNCs, have seen violence escalations where there have been direct or indirect hindrances to TNCs through government regulations.

Relationship between TNCs and countries

Governments and TNCs often exist in a symbiotic relationship, with each entitys success and interests intertwined. Indeed, TNCs typically work hand-in-hand with governments, collaborating and often influencing key government policies.

This relationship remains mutually beneficial, with both parties wielding influence over each other. A notable example of such a mutually beneficial relationship is former US Secretary of State, Rex Tillerson’s ten-year tenure at ExxonMobil.

During his time as CEO of Exxon Mobil, Tillerson worked hand in hand with the US government, helping to shape US energy policy. And, upon being appointed as Secretary of State by President Donald Trump, Tillerson leveraged his knowledge and experience in the energy sector to improve US diplomatic relations therein.

The relationship he fostered over years with the Russian government allowed him to become one of Russia’s most vocal advocates in the Trump administration. The relationship between governments and TNCs is not without criticism, however, with some highlighting the risk of corruption as a key area of concern.

Too close a relationship between governments and TNCs may undermine the interests of local communities adversely affected by TNC operations. This is often a result of governments’ dependency on TNCs’ contributions to the local economy, leading to the development of policies favorable to such corporations.

Furthermore, maintaining a dependency on TNCs can have a destabilizing effect on economies. For instance, TNC preference for automation over human labor can result in the loss of jobs and the reduction of local technical and intellectual capacity.

Small business owners are also at a disadvantage due to the TNCs’ exceptional buying power, leading to reliance on TNC supplies, which can sometimes be costly and unsustainable over long periods.

Conclusion

In conclusion, the power of TNCs remains significant in comparison to nation-states. The relationship they share is mutually beneficial, with governments depending on TNCs for significant contributions to the national economy, and TNCs contributing to the local economies.

Through tax evasion, lobbying, violence, among other activities, TNCs wield significant economic and political power worldwide. It is imperative to maintain a balance between government-tnc relations to ensure their activities do not negatively impact communities and economies adversely.

In conclusion, this article has highlighted the power of corporations, both globally and at the national level. It has examined the significant revenue and economic influence of the top TNCs compared to countries and the balance between TNCs and governments’ symbiotic relationship.

Understanding the power of TNCs and their relationship with governments is crucial to appreciate the dynamics driving the global economy and to frame policy and regulations contributing to the sustainable growth and development.

FAQs:

Q: What is a TNC?

A: A TNC or transnational corporation is a company that operates in multiple countries around the world, often with a centralized management structure, with an intent to sell goods and services or create assets in new markets. Q: How are TNCs more powerful than nation-states?

A: TNCs wield significant economic influence and political power worldwide, challenging governments’ political power by engaging in activities such as lobbying, campaign financing, and taking interest in shaping policies. Q: Are TNCs beneficial to economies?

A: TNCs can provide significant contributions to the national economy and help stimulate the growth of local businesses. However, such contributions depend on the relationships and policies that governments have with TNCs, which can sometimes lead to harm to the economy and communities.

Q: What is the role of governments in regulating TNCs? A: Governments should regulate TNCs to ensure that their activities support rather than undermine the interests of local communities, ensure conflict-sensitive and corruption-free practices, and ensure that their operations are sustainable and do not harm the environment.

Q: What are the risks associated with the relationship between TNCs and governments? A: Overreliance on TNCs can often lead to the development of policies favoring them, disadvantaging small business owners and leading to the loss of jobs and reducing local technical and intellectual capacity.

Popular Posts