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Lecture Highlights - Roles of MNC. The global ones are mainly high tech companies. Many are financial institutions or owned by powerful people. Key Role is providing FDI, usually via: M & A Equity holding Financial Restructuring. + impacts on locations, regionally or globally.

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Lecture highlights roles of mnc
Lecture Highlights - Roles of MNC

The global ones are mainly high tech companies

Many are financial institutions or owned by powerful people

  • Key Role is providing FDI, usually via:

    • M & A

    • Equity holding

    • Financial Restructuring

+ impacts on locations, regionally or globally

Code of Conduct Principles on how they comply to good governance principles relating to

Human Rights

Labour Equality

Environment Sustainability

Anti Corruption


Why mncs invest in fdi
Why MNCs invest in FDI?

Country Attractiveness

Marketing Factors

Trade

Barriers

Profit Attractions

Cost Factors

Investment Supporting


Host country cost benefits
Host Country Cost-Benefits

  • Host Country Costs

  • Industrial dominance

  • Exploitation of raw materials and cheap labour

  • Bribery and corruption

  • Interference in political matters

  • Technological dependence

  • Disturbance of economic plans

  • Cultural change

  • Interference by home government through MNC

  • Degree of government control may be less than intended

  • Host Country Benefits

  • Improves Gross Domestic Product via repatriation of profits, royalties & fees

  • Increases export opportunities

  • Political advantages

  • Job losses

  • Net effect on imports & exports

  • Creating competitors


Allegations against mncs
Allegations against MNCs

Control of technology transfer pricesInappropriate technology introduction to host country

Skip the country when regulation sets in

MNC control systems exert neo-colonist relationship with host country

Expose country sensitive information in global intelligence networks

Produce products that do not create or contribute social value to host country

Undermining national labour interests

Avoid paying taxes

Give best jobs to own boys, especially in HQ circles

POORCorporate

Social Responsibility

Code of Conduct Principles on how they comply to good governance principles relating to

Human Rights

Labour Equality

Environment Sustainability

Anti Corruption


Lecture highlights trade theories
Lecture Highlights - Trade Theories

  • 16th Century Mercantilism theory

  • Absolute Advantage (Adam Smith)

  • Comparative Advantage (David Richardo)

  • 19th Century onwards

  • Factor Proportions Theory (Heckscher & Ohlin)

  • Country Similarity Theory (Steffan Linder)

  • Global Horizons Theory

  • Product Life Cycle (Vernon)

  • New Trade Theory

  • Ownership Advantage Theory (S.Hymer)

  • Internationalisation Approach (Buckley and Casson)

  • Global Strategic Rivalry theory

  • Porter’s National Competitive Advantage (diamond) theory

  • Internalisation Theory

  • Eclectic Theory (John Dunning)



The rise of bangladesh s textile trade case study
The Rise of Bangladesh’s Textile Trade Case Study

Bangladesh's textile industry – 1.51 m

https://www.youtube.com/watch?v=CxKlnkp9SvQ

Ethnical Textiles – 3.31m

https://www.youtube.com/watch?v=A3xrXC9wcZg

https://www.youtube.com/watch?v=hcYYLmcxavA

Martin Jacques - When China Rules the World – 10.04 m

https://www.youtube.com/watch?v=Og8zBhDDkEQ

Source: The Hindu, Dec 20, 2012

Why was the shift to a free trade regime in the textile industry good for Bangladesh?

Who benefits when retailers in the US source textiles from low-wage countries suh as Bangladesh?

What international trade theory or theories best explain the rise of Bangladesh as a textile exporting powerhouse?

How secure is Bangladesh ‘s textile industry from foreign competition? What factors could ultimately lead to a decline?


The benefits
The Benefits

  • During Lecture, we saw the POSITIVES:

  • Capital Formation

  • Technology Transfer

  • Regional & Sectoral Development

  • Internal Competition & Entrepreneurship

  • Favourable Effect on Balance of Payments

  • Increased Employment

Bangladesh's textile industry – 1.51 m

https://www.youtube.com/watch?v=CxKlnkp9SvQ

At What Costs?

At Whose Costs?


Bangladesh has the advantage of not being china
Bangladesh has the advantage of not being China

The argument focus is Cost Advantage

China

Martin Jacques - When China Rules the World – 10.04 m

https://www.youtube.com/watch?v=Og8zBhDDkEQ

The long version – 1.34 hrs

https://www.youtube.com/watch?v=3G1EyvRZmOs


The costs
The Costs

  • During Lecture, we saw the NEGATIVES:

  • Industrial dominance

  • Exploitation of raw materials + cheap labour

  • Bribery and corruption

  • Interference in political matters

  • Technological dependence

  • Disturbance of economic plans

  • Cultural change

  • Interference by home government through MNC

  • Degree of government control maybe less than intended

Technology transfer may be too expensive or inappropriate (eg old)

Can move out when country regulates

Products are for overseas markets and may not benefit local social needs or value

MNC’s home country’s labour /employment interests are undermined

Avoid taxes

Best jobs given to MNC’s privileged people

Ethnical Textiles – 3.31m

https://www.youtube.com/watch?v=A3xrXC9wcZg

https://www.youtube.com/watch?v=hcYYLmcxavA


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