MGT353 - Chapter 06

1 the worlds top 10 nonfinancial transnational

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Unformatted text preview: al Transnational Corporations 6-7 Foreign Direct Investment Another important aspect of globalization is the worldwide flow of capital Foreign direct investment (FDI) occurs when a company, individual, or fund invests money in another country, for example, by buying shares of stock in or loaning money to a foreign firm In 2010, FDI was $1.24 trillion 6-8 4 2/17/2014 The Acceleration of Globalization The world’s economy is becoming increasingly integrated Higher share of output is being exported across national borders One-fifth of all goods and services produced worldwide is sold to other nations, rather than domestically This is almost double the percentage of 1960 In earlier years, most exports were of goods. An important recent trend is the globalization of services, such as travel, insurance, financial, and information services. 6-9 The Acceleration of Globalization Driven by several factors: Technological innovation • Easier to communicate with employees, partners, and suppliers all over the globe in real time Transportation systems • Improvements enable the fast and cheap movement of goods and services from one place to another 6-10 5 2/17/2014 The Acceleration of Globalization Driven by several factors (Continued): The rise of major transnational corporations • Bigger, well-capitalized, firms are better equipped to conduct business across national boundaries than smaller firms Social and political reforms • Rise of Pacific Rim growth economies, collapse of communism in Central and Eastern Europe have opened new regions to world trade 6-11 International Financial and Trade Institutions Three institutions that set the rules by which international commerce is transacted: World Bank (WB) International Monetary Fund (IMF) World Trade Organization (WTO) No business can operate across national boundaries without complying with rules set by the WTO Many businesses in developing countries are dependent on WB and IMF loans to survive 6-12 6 2/17/2014 The World Bank Established in 1944 Provides economic development loans to its member nations Funds used mainly for roads, dams, power plants, pipelines, and other infrastructure projects Funding provided by member countries and international capital markets Negotiates “structural adjustment plans” with countries it loans to Applies conditions on these countries Conditions are considered by critics to lead to unfair burden on developing countries 6-13 International Monetary Fund “Sister” organiz...
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This document was uploaded on 03/05/2014.

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