BUS-D 270 Chapter Notes - Chapter 5: Capital Outflow, Petrobras, Global Warming
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Long term = all must be adequately met. Measuring the impact of the mne on home and host societies depends on stakeholders, understanding cause & effect relationships, individual vs aggregate effects. It"s hard to determine if mne actions affect societal conditions. B = (m - m1) + (x - x1) + (c - c1) C = capital inflow for other than import/export payment. C1 = capital outflow for others can import/export payment. Calculating the net import effect (m - m1) Imports = balance of payments is positive if the fdi results in substitution for imports and negative if it results in an increase in imports. Net export effect = export stimulus - export reduction (x - x1) Calculating net capital flow (c - c1) The balance of payments effects for capital flows for fdi are usually: Positive for the host country initially and negative for the home country. Negative for the host country and positive for the home country later.
