GEOG 2000 Lecture Notes - Fall 2018 Lecture 3 - Capital outflow, Foreign direct investment, Multinational corporation
Document Summary
Why do companies invest overseas: market seeking, resources, strategic asset seeking, efficiency. Why has foreign investment increased: technology- internet (information, lure of higher profits, fall of the berlin wall, us=biggest foreign investor. Benefits of foreign investments: growth of capital stock, incorporated technologies, possibilities to gain managerial/labor skills, higher incomes and economic development (taxation for public sector, finance education, health, infrastructure development, etc. Costs of fi: dependence on external powers, sweatshops and labor exploitation, working conditions and wages, environmental degradation (air/water/soil pollution) Fdi: firms prefer fdi to other market entry strategies, political ideology affects government fdi policy. Why fdi: over exporting, high transportation costs, trade barriers, over licensing or franchising, need to retain strategic control, protect technological know-how. Countries w/ trade deficits: japan, china, canada, mexico. Benefits: resource-transfer, employment, balance of payment (bop) that"s a source of export increase and import increase.
