MGRECON401 Economics of International Business and Multinationals LECTURE 4. Multinational Investments, Outsourcing, and Ethics. Lecture Focus. What are the trends in FDI? What determines the choice between FDI, exporting, and licensing? What are the benefits of a multinational?
Multinational Investments, Outsourcing, and Ethics
Horizontal FDI = FDI in the same industry as the firm operates at home.
Vertical FDI = FDI in either an industry that is backward (e.g., provides an input) or forward (sales and distribution) of a production/sales process.
The amount of FDI undertaken over a given period of time (usually one year).
Total accumulated value of foreign-owned assets at a given time.Flow and Stock of FDI
World GDP and FDI 1990-2001 (index = 100 in 1990)
United Nations Conference on
Trade and Development (UNCTAD):
cforeignY+ G < (chome + t)Y
G/Y < t +chome -cforeign