The Multinational in the World Economy

Question 1

Definition of a MNE

Who is the definition from?

Answer 1

MNE is a company which owns and controls income generating assets in at least 2 countries
Wild and Wild

Question 2

What is a portfolio investment?

Answer 2

The purchase of shares - very little input into how things are run

Question 3

When was the American Blueprint/Marshall plan?

Answer 3

Inter war period and post WW2

Question 4

What is the American Blueprint/ Marshall Plan?

Answer 4

US lends money to western Europe - in return US companies allowed trade into Europe
Free enterprise
High competition

Question 5

Globalisation General Trends (4)

Answer 5

Capital Transfers
Employment creation (in subsidiary companies)
Relocation of production due to cheaper wages
Technology transfer (over 95% of patents are taken out by MNEs)

Question 6

4 Reasons for MNE expansion

Answer 6

Declining barriers to FDI and Trade - WTO expand trade and exports abroad
Reduce tarriffs and import quotas
G.A.T.T –> General agreement for tariffs and trade
Regionalisation
Improvements in transport and communications

Question 7

Other Main Reasons for expansion (7)

D-LM-GM-RFC-RC-O-T

Answer 7

Diversification - against risks of domestic market e.g. Japan
Large Market - e.g. USA
Growing Market - eg. China
Response to Foreign Competition
Reduce costs
Overcome trade restrictions
Take advantage of technology