OAGE 2105 - Global Firms as Geoeconomics Actors

This course examines how global companies affect geoeconomic outcomes and in turns, how their operations are influenced by geopolitical events.

A large share of economic activities world-wide is accounted for by large, frequently multinational, companies operating in many countries and around different geographies. Even though most companies are small, global events, like international financial transactions, trade and foreign investments are dominated by few large global players. This is even more so today as a few big techs dominate several crucial markets: software, online trade, communication networks, AI technologies. What are the drivers of this concentration of economic activities? Why do firms become large and multinational? And how do the increasing fragmentations of global markets affect firms’ choices and performance?

Also, this concentration of market power has important economic consequences globally, on host and home economies. Moreover, these firms are key geopolitical and geoeconomic actors. Because they influence policy choices. For example, large car multinationals had a crucial role in moulding the trade agreement on rare earth between the US and China. And because they can affect global events through their market power. Consider the role of Starlink in providing adequate and unique satellite coverage for Ukranian troops. At the same time and from the opposite perspective, firms are facing an increasingly risky environment which affect their choices in terms of investment and the geography their operations.

What is the impact of the activities of such large firms on basic economic outcomes: productivity, trade, growth, employment, income distribution? And what is their influence on broader geopolitical and geoeconomic events? And how do geopolitical events affect their decisions?

From the perspective of governments, what should adequate policy responses be? Should market power be tamed by competition policies? And if so, how? Should digital and AI markets be regulated? Or will such actions discourage innovation and research? Should governments aim at attracting global players in their countries? Or resist their pervasiveness? Should policies be globally coordinated or pursued at the national level?

This course will address these questions, discussing several theoretical and empirical approaches, specific cases and analysing some examples of policy action in different parts of the world.

Previous background in economics (at least introductory micro and macroeconomics) is highly recommended.

If the class is sufficiently small, presentation and debates on specific items by groups of students will be arranged during the course.

In class activity will account for 50% of the final grading. A final written exam will account for 50% of the grades.