Multinationals and Trade Flashcards
What is national comparative advantage?
Countries should export what they are good at and buy stuff that they can’t make in their own country
How can foreign direct investment influence trade?
It can act as a trade substitute-when market seeking
It can act to stimulate trade-when efficiency and resource seeking
How do MNCs influence jobs in the home country?
The most vulnerable, lower skilled workers are likely to lose their jobs
FDI can increase trade and can increase aggregate exports, meaning increased domestic jobs
MNCs threaten relocation in order to extract concession from labour
What are the multiple purposes of intrafirm trade (trade between two subsidiaries of the same company in different countries)?
Retain control over critical technologies
Product shifting to reduce tax exposure
Subsidisation of subsidiaries for competitive advantage
What is intel producing microchips in Costa Rica an example of?
Changing national comparative advantage in order to increase profit
