Class 9

Question 1

What’s the Periphery x Core model?

Answer 1

• Periphery: Less noble activities like production and assembly tend to stay in developing emergent countries
• Core: The noblest and highest added value activities such as R&D, Projects, software, branding, marketing tend to stay in developed countries

Question 2

Why is the rate of investment so low in Latin America? (3)

Answer 2

• On the part of the private domestic companies it is because the risk of the future has been very strong
• On the part of the multinational companies they must be sure that the rules won’t change and that they can send the profits to the headquarters
• On the part of the government it is due to the lack of financial capacity

Question 3

What’s the difference between FDI and FPI?

Answer 3

• Foreign Direct Investment (FDI) involves foreign investors directly investing in another nation’s productive assets.
• Foreign Portfolio Investment (FPI) entails investing in financial assets, like stocks and bonds, of entities situated in a different country

Question 4

What does a multinational company look for when investing in other countries? (4)

Answer 4

1. Market
2. Natural resources and/or labor
3. Lower production costs through synergies
4. Strategic advantage over competitors