1、Chapter 15,Multinationals and Migration: International Factor Movements,Foreign Direct Investment (FDI),Flow definition: Flow of funding provided by investors (usually firms) to establish or acquire foreign companies or to expand or finance existing foreign companies that the investors own. Key is s
2、ufficient ownership to control or influence the management of the foreign company. Stock definition: Total value of existing funding (equity and debt) of foreign companies that has been provided by investors that own these foreign companies.,Multinational Enterprise (MNE),A firm that owns and contro
3、ls operations in more than one country. The parent firm of the MNE is located in the home country. The home country is the source country for outward FDI. The MNE has one or more affiliates located in one or more host countries. The host country is the destination country for inward FDI.,Examples of
4、 FDI and Portfolio Investments,Figure 15.1 Major Home Countries Direct Investments, End of 2002 (Billions of U.S. Dollars),Table: Transfer Price Affects Global After-Tax Profit,Why Do MNEs Exist?,Inherent disadvantages of operating a foreign affiliate competing against local firms. Firm-specific adv
5、antages of the MNE, especially intangible assets. Internalization advantages in using these assets. Location factors based on resource costs and availability, customer demand, government policies, and other considerations. Oligopolistic rivalry that uses FDI in the firms strategies for competing.,Ta
6、xation of mulinational enterprises profits Transfer pricing The setting by the firm of monetary values (prices) for things that move between units of the firm (such as things that move among the parent firm and the foreign affiliates of an MNE).,Should the home country restrict FDI outflow? Should the host country restrict FDI inflows?,Immigration,Figure 15.2 Gross Immigration Rates into the United States, 1820-2004, and Canada, 1852-2004,Figure 15.3 Net Immigration Rates into the European Union, 1960-2004,Figure 15.4 Labor-Market Effects of Migration,
