MGCR 382 Lecture Notes - Lecture 8: Eclectic Paradigm, Human Resource Management, Organizational Structure
17 Feb 2012
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Chapter 6 international trade & and investment (cont. ) International investment in which residents of one country supply capital to a 2nd country, is another major form of international business. Trade and investment may be substitutes for one another, or they may be complementary. Fdi makes firms into mncs and helps them gain an international competitive advantage. Foreign direct investment occurs when a firm invests directly in new facilities to produce and/or market products in a foreign country. Once a firm undertakes fdi it becomes a multinational corporation (mnc) Since the 1950s: 70,000 plus mncs (e. g. nestle, sony, toyota, coca-cola, caterpillar, ibm) have been investing abroad massively and shaping global trade, investment and technological flows. Controversy: fdi is a 2 edged sword to a recipient host country. Benefit: fdi may increase productivity, employment and wage rates. Cost: fdi may mean control of a country s economy is being passed to foreigners.
