MKT 310 Study Guide - Midterm Guide: Foreign Direct Investment, Capital Outflow, Double Taxation
Document Summary
Chapter 8: foreign direct investment: fo(cid:396)eig(cid:374) di(cid:396)e(cid:272)t i(cid:374)(cid:448)est(cid:373)e(cid:374)t i(cid:374) the wo(cid:396)ld e(cid:272)o(cid:374)o(cid:373)(cid:455) (cid:894)defi(cid:374)ition of fdi, and related terms, the general trends in direction, source, and form of fdi) Fdi- when a firm invests directly in facilities to produce or market a product in a foreign country. Fdi grown more than world trade and world output. Better than licensing because of the internalization theory which states 3 drawbacks of license: may result in giving away info to competitor 2. Not enough control over manufacturing, marketing, and strategy and 3. Production capabilities may be limited in a foreign market: pattern of foreign direct investment. Oligopoly and multipoint competition: eclectic paradigm location-specific advantages, be(cid:374)efits a(cid:374)d costs of fdi. Benefits of host (receiving) country resource-transfer effects, employment, balance of payments effects, competition and economic growth. Host country costs adverse effects on competition within host nation, adverse effects of balance of payments, and national sovereignty and autonomy.
