Econ12.2.10

Econ12.2.10 - Cypher/Dietz14 ChunYunqi(didn'tread) TungWan...

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Cypher/Dietz 14 Chun Yunqi (didn't read) Tung-Wan Ch. 14 A.TNCs: operate in two or more countries 1.Trading companies: raw materials, etc (not very relevant) 2.Resource intensive, vertically integrated (not very relevant for East( Asia) 3.Branch manufacturing plants (ISI) (Taiwan Export Processing Zones) 4.Global factory production sites (yes, very relevant) Communication and transportation revolution: internet, email, lower costs of transportation with  standardized shipping containers  focus on design, marketing, everything in between is outsourced (production) For 1 and 2, heavy concentration: very few TNCs account for a large share of the market B. FDI TNCs produce for the country in which the factory is located as well as for exporting 1.Benefits of FDI (i) overcoming scarce capital: China has enough capital, Korea, Japan, probably FDI is typically a small share of all investment in a country (ii)Modernization (iii)Focus on growth industry (iv)Introducing export culture Evaluation: quite successful with easy ISI 2.Costs (i)Transfer pricing (yes) TNC->Factory->market US China US 100 100(90cost, 10 profit) 200
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Econ12.2.10 - Cypher/Dietz14 ChunYunqi(didn'tread) TungWan...

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