国际经济学Chap009.pptVIP

9 International Factor Movements and Multinational Enterprises Introduction Role of international capital flows (investment) Multinational enterprises and international reallocation of capital Analysis of international mobility of labor Multinational Enterprise (MNE) Identifiable features of these businesses: Operation in many host countries Cutting across national borders Direction from a company planning center, distant from host country Glimpse of some of the world’s largest corporations (Table 9.1) MNE: Diversified Operations Vertical integration Backward integration Forward integration Horizontal integration Conglomerate integration Diversification into nonrelated markets MNE: Investments Rely on foreign direct investment (FDI): Parent company obtaining sufficient common stock in foreign company Parent company acquires or constructs new plants and equipment overseas Parent company shifts funds abroad to finance an expansion of its foreign subsidiary Earnings of the parent company’s foreign subsidiary are reinvested in plant expansion Position of the U.S. with respect to foreign direct investment in 2002 (Table 9.2) Motives for FDI Firms remain competitive and supports employment at home Economic growth and job creation Stimulates exports of machinery and capital goods Anticipation of future profits Other factors: Market-demand conditions Trade restrictions Investment regulations Labor costs Transportation costs Demand Factors Quest for profits through new markets and sources of demand Tap foreign markets that cannot be maintained adequately by export products Parent company’s productive capacity meets domestic demands Market competition Prevent foreign competition by acquiring foreign businesses Cost Factors Increasing profit levels through production costs reduction Forms of cost-reducing FDIs: Procuring essential raw materials Reducing labor costs Location affecting transportation costs Government policies providing benefit: Subsidies (preferential tax treat