Chapter 16

Chapter 16 - Chapter 16 Foreign Direct Investment and...

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Chapter 16 Foreign Direct Investment and Cross-Border Acquisitions
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Question 2 Japanese MNCs, such as Toyota, Toshiba, and Matsushita, made extensive investments in Southeast Asian countries like Thailand, Malaysia, and Indonesia. In your opinion, what forces are driving Japanese investments in this region? Quite possibly Japanese MNCs have invested heavily in this region in order to take advantage of underpriced labor, cheaper land, cheaper factors of production, along with rich additional resources.
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Question 3 Since NAFTA was established, many Asian firms, especially those from Japan and Korea, have made extensive investments in Mexico. Why do you think these Asian firms decided to build production facilities in Mexico? NAFTA set out to establish external trade barriers to encourage trade between the United States, Canada, and Mexico. The benefits of this agreement were two fold to Mexico: not only did it enjoy reduced tariffs amongst the United States and Canada, it also enjoyed increased FDI from non-member countries. As a result of the barriers, foreign investors (such as Korea and Japan) wishing to remain active trading partners with NAFTA-members created facilities within Mexico as a workaround to these trade barriers.
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Chapter 16 - Chapter 16 Foreign Direct Investment and...

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