International business

Political Ideology + FDI
1. The Radical View: brought thru Marxist Theory
Multinational are an instrument to imperialist domination
- Exploitation of host
- Profit go to home
- Key technology
- Important Jobs
- Suppressed foreign weak country
2. Free market View
Country should specialized in producing goods that they're most efficiently - absolute adv
- Specialize
- increase efficiency
- resource transfer benefits both and raise standard of living by increasing PPF
3. Pragmatic Nationalism
- We accept FPI as long as it benefits our nation
- Maximum National benefits & Minimize National Cost. Net benefit is positive.

Benefits of FDI to host country
1. Resource transfer effects
- Capital
- Technological
- Management
2. Employment Effects
1 Direct effect (ex. hire 3000 ppl in host country)
2 Indirect effect ">= than direct"
- Supplier multiplier (many other factories that help the main one)
- Local spending effect
3. Balance of payments effects
2main section (-) payment to another country
(+) receipt from another country
I. Current account
Merchandise trade (goods) - (if exceed 5% of GDP, expect armageddon) 6.5% last year

Services - (banking and insurances) +
Investment income +
Transfer payment -
II. Capital Account
Tracks purchase or sale of assets +

4. Efffect on competition and economic growth
+ productivity
- price
+ innovation
----------------
+ econ growth

BOND market
Primary bond market- new bond
Secondary market - used bond
price of bond go up, yield of it go down
why?
Substitution effect (not a benefits)