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310 lecture 10

More on FDI

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310 lecture 10

  1. 1. International Economics Lecture 10 More on FDI pages 259-273
  2. 2. Benefits and Costs
  3. 3. Benefits and CostsHost Country - ReceivingHome Country - Source
  4. 4. Host Country Benefits
  5. 5. Host Country BenefitsResource-Transfer Effects Employment EffectsBalance-of-Payment EffectsCompetition and Growth
  6. 6. Resource-Transfer Effects
  7. 7. Resource-Transfer Effects Capital Technology Management
  8. 8. Employment Effects
  9. 9. Employment Effects Direct Indirect Higher wagesMore productive
  10. 10. Balance-of-Payment Effects
  11. 11. Balance-of-Payment Effects Current accountNet of payments and receipts FDI substitutes imports China cell phones
  12. 12. Competition and Growth Effects
  13. 13. Competition and Growth Effects More choicesHigher quality & lower costs Cell phones
  14. 14. Host Country Costs
  15. 15. Host Country CostsCompetition & Monopoly Balance-of-Payments Independence
  16. 16. Competition and Monopoly
  17. 17. Competition and MonopolyHarm local companies then monopolize Mergers
  18. 18. Balance-of-Payment Effects
  19. 19. Balance-of-Payment EffectsInvest in then take profits out Import parts to assemble Local content requirements
  20. 20. Independence
  21. 21. Independence National Sovereignty and AutonomyCompetition prevents ransom
  22. 22. Home Country Benefits
  23. 23. Home Country Benefits Inflow of foreign earnings Demand for exportsIntermediate and compliments Learn new skills
  24. 24. Home Country Costs
  25. 25. Home Country CostsBalance-of-Payments Capital OutLow cost productionNo longer an export Employment
  26. 26. Government Policy Instruments
  27. 27. Government Policy Instruments Home Country EncourageInsurance, loans, tax credits Political pressure Restrictions
  28. 28. Government Policy Instruments
  29. 29. Government Policy Instruments Host Country EncourageInsurance, loans, tax credits RestrictionsOwnership and Performance
  30. 30. WTO1995
  31. 31. WTO 1995 ServicesTelecommunications Finance
  32. 32. Transportation Low Export Costs and Tariffs? HighKnowledge amenable No FDI to licensing Yes Tight control over Yes FDI operation NoProtected knowledge No FDI with contract Yes License

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