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12 Cards in this Set

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FDI
The ownership and control of foreign assets. Usually means the ownership, whole or partial of a company in a foreign country.
Reasons for FDI
1) Increased sales and profitability.

2) Chance to enter rapidly growning mkts.

3) Reduced costs.

4) Gaining a foothold in economic unions.

5) Protecting domestic mkts.

6) Protecting foreign mkts.

7) Acquiring technological and managerial know-how.
7 Reasons
What is the figure of FDI that occurs between or among triad countries?
80%
Are Political ideologies and economic systems interdependent?
yes
Democracies
tend to have mkt driven economies
Totalitarian regimes
Tend to ahve centrally-determined economies.
Mkt Driven Economy
An economy in which goods and services are allocated on the basis of consumer demand.
Centrally driven economy
Economy in which goods and services are allocated based on a plan formulated by a committee that decides what is to be offered.
What is the benefit of current continuing trend of privatization?
1) Increased efficiency

2) Reduction in gov't outlays.

3) Generation of funds for nat'l treasury
Economic Integration
The establishment of transnational rules and regs that permit economic trade and cooperation among countries. Effective integration brings trade creation (trading by comparative advantages between club members)
Levels of economic trade integration
1) Free trade areas

2) Customs Unions

3) Common Mkts

4) Economic Unions

5) Political Unions
5 levels
MNEs use a variety of strategies to benefit from integration efforts. Name 2
1) Strategic alliances and acquisitions iot gain an inside position in the economic alliance or free trade area.

2) Localisation of operations by focusing on products, profits, production, and management.

(MNEs usually do both)