Slide 2: MULTINATIONAL FIRMS, REGIONAL INTEGRATION
AND GLOBALIZING MARKETS:
Implications for Developing Countries
MERIT – Maastricht Economic Research Institute on Innovation and Technology
INTERNATIONAL INSTITUTE OF INFONOMICS
Professor of International Business RegulationDepartment of EconomicsUniversity of Reading
http://ideas.repec.org/e/pna30.html Elaborated by: Ignacio W Loor-Colamarco, MIBA - Economist
Slide 3: Paper objective:
Examine the effect of regional integration (RI) on Multinational Enterprises (MNE) strategies. How the allocation of foreign direct investment (FDI) flows with new RI schemes.
Globalization is an effect, not a cause. No economy skips from being tightly linked to the rest of the world, and this is an ongoing accelerated and unavoidable process.
Economic integration is a cause, not an effect. RI can be manipulated and controlled.
Key Terms: Elaborated by: Ignacio W Loor-Colamarco, MIBA - Economist
Slide 4: Key Concepts:
Import-substituting policies are in force
Floating currencies, reduction of tariff and non-tariff barriers, reduction of local content requirements, removal of export requirement from MNEs, reduction of subsidies, and Privatization of some state-owned assets
Refers to an integration between nations in the upper hemisphere, usually industrialized economies
Refers to a sort of integration between a nation in the upper hemisphere and another in the lower one. Or, an industrialized and a non-industrialized countries
Country Distinction on this Paper:
Group I: Less developed countries with little or no domestic industrial capacity
Group II: Countries that possess an intermediate level of domestic capacity
Group III: Industrialized countries Elaborated by: Ignacio W Loor-Colamarco, MIBA - Economist
Slide 5: Motives for Multinational Investment:
TO SEEK NATURAL RESOURCES:
Where a region or country possesses an absolute advantage in a given scarce resource.
TO SEEK NEW MARKETS:
Usually requires sizeable population and projection of growth in demand.
TO RESTRUCTURE EXISTING FOREIGN PRODUCTION THROUGH RATIONALIZATION:
Search for efficiency improvement, usually engaged in export-oriented resource-seeking
TO SEEK STRATEGICALLY RELATED CREATED ASSETS:
Assets with high or steady growth rate , formal financial markets
Forms of Multinational Investment:
TMR, RPS, WPM, RPM, SRPM Elaborated by: Ignacio W Loor-Colamarco, MIBA - Economist
Slide 6: Debate:
This paper analyzes how Multinationals Investments respond to both globalization and regional integration processes.
The author concludes that FDI in regional integration among less developed countries have not been beneficial. If that statement is accurate, do you consider worthy for less developed countries to wholly liberalize their economies and form regional integrations with the exclusive purpose of attracting FDI?
Elaborate on this question and post your comments on the virtual classroom Elaborated by: Ignacio W Loor-Colamarco, MIBA - Economist