Chapter 7 notes - Chapter 7 Foreign Direct Investment...

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Chapter 7 Foreign Direct Investment Greenfield investment - establishing a new operation in a foreign country Flow of FDI - the amount of FDI undertaken over a given time period (normally 1 year) Stock of FDI - the total accumulated value of foreign-owned assets at a given time Outflows of FDI - the flow of FDI out of a country Inflows of FDI - the flow of FDI into a country Gross fixed capital formation - summarizes the total amount of capital invested in factories, stores, office buildings, and the like. Eclectic paradigm - argument that combining location-specific assets or resource endowments and the firm’s own unique assets often requires the firm the establish production facilities where those foreign assets or resource endowments are located Exporting - sale of products produced in one country to residents of another country Licensing - occurs when a firm (the licensor) licenses the right to produce its product, its production processes, or its brand name or trademark to another firm (the licensee); in return for giving the licensee these rights, the licensor collects the royalty fee on every unit the license sells Internationalization theory - the argument that firms prefer FDI over licensing to retain control over know-how, manufacturing, marketing, and strategy or because some firm capabilities are
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Chapter 7 notes - Chapter 7 Foreign Direct Investment...

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