Global economic

wait till price crash then buy bonds.

Benefits of FDI for the host


{Home} {Host}
MNE
multi national enterprise
Cost of FDI for the host (to home)
1. Adverse affect on competition - MNE has for economic power, (radical view) Wipe existing co. out. End up with Monopoly power.
-Bring Brand Equity
-Funding
-Distribution Channel
-More experienced
Infant Industry argument
2. Adverse effects on B of P
Balance of payment effects on the host- Outflow of earning of MNE (Minus) Its in
-(Current account) merchandise trade
+ (Export account)
3. National S--- Loss of economic independence

Benefits of FDI to Home
1. Balance of Payment effects: + Investment Income + Merch Trade
Employment: Building sub comp
Learning economies: better and better at it.
Costs: Balance of Payments
-Negative employment effects

CH8 ECONOMIC INTEGRATION

Forms of:
Free trade area: All barrier to trade removed
Customs Union: Same as above, but w, a common external trade policy. (a little harder to do)
Common Market: same as above, plus factor of production move freely among member nation
Economic Union: All of the above, plus: common tax rate, currency, monetary policy, Fiscal policy (EU)
Political Union: U.S.