Chapter 8 - FDI

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exports licensing foreign
Jodie Arnold
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Jodie Arnold
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Chapter 8 - FDI
  1. High transportation or tariffs may be barriers to exports
    1. Two forms of FDI
      1. buying a firm in a foreign country
        1. establishing operations there
        2. Prefer FDI over licensing when
          1. Protect knowledge know how
            1. tight control over manufacturing etc
              1. not suitable to licensing
              2. Knickerbocker theory
                1. Dunning - FDI to exploit resource endowments location specific
                  1. Political ideology
                    1. Radical stance
                      1. Noninterventionist
                        1. Pragmatic nationalism
                        2. Benefits & Costs to Host Countries
                          1. + employment
                            1. + BOP effect
                              1. + resource transfer effects
                                1. - national sovereignty
                                  1. - competition
                                    1. - BOP
                                    2. Benefits & costs to source countries
                                      1. Govt encourage FDI through incentives
                                        1. Govt discourage FDI through ownership restrictions and performance requirements
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