The Primary Costs Of FDI To Host Countries Are Loss Of Sover

The Primary Costs Of Fdi To Host Countries Are Loss Of Soverei

1. The primary costs of FDI to host countries are: . Loss of sovereignty and patriotism . adverse effects on competition and exports . capital outflow . loss of sovereignty, adverse effects on competition, and capital outflow

2. ______ suggests that FDI , unrestricted by government intervention, will enable countries to tap into their absolute or comparative advantage by specializing in the production of certain goods or services. . the radical view . the free market view . pragmatic nationalism . expropriation

3. What are the benefits of FDI to home countries? . repatriated earnings from profits from FDI . increased exports of components and services to host countries. . learning via FDI from operations abroad . all of these answers.

4. when one firm enters a foreign country through FDI, its rivals are likely to follow by undertaking additional FDI in a host country to: . create knowledge spillover . discover a new market for its goods . overcome and combat market failure through FDI . acquire location advantages or neutralize the first mover's location advantages

5. most countries practice: . pragmatic nationalism . free market based FDI . government embracing radical view . french patriotism

6. FDI may be viewed as a reflection of firm motivation to extend firm-specific capabilities abroad and their response to overcome imperfections and failures. . true . false

7. most countries practice a totally"free market" view. . true . false

8. Outsourcing is the process of turning over an organizational activity to an outside supplier, located in a foreign country, which will perform it on behalf of the local firm. . true . false

9. financial, physical, and technological resources and capabilities are all tangible assets. . true . false

10. a. firm's resources and capabilities are tangible assets a firm use to choose and implement its strategies. . true . false

11. an example of low power distance would be when subordinates address their bosses on a first-name basis . true . false

12. Benchmarking is an assessment as to whether a firm has resources and capabilities to perform a particular activity in a manner superior to competitors. . true . false

13. a country with low-masculinity has a more subtle differentiation between the gender roles. . true . false

14. setting up subsidiaries abroad so the work can be performed in-house but in the foreign location is also called captive sourcing. . true . false

15. managers in low uncertainty avoidance countries rely more on experience and training then managers in high uncertainty avoidance countries who rely more on rules. . true . false

16. informal institutions include laws, regulations, and rules. . true . false

17. the united states is often classified as a collective society . true . false

18. a pure market economy characterized by the "invisible hand" of market forces is noted by . John Stuart Mill . Adam Smith . Aristotle . Amartya Sen

19. Culture is defined in the text as: . the communication between members of similar location . the collective programming of the mind, which distinguishes the members of one group or category of people from another . the main component of formal institutions. . the attitudes and behaviors characteristic of a particular social group or organization.

20. when an expert employee returns to her or his current employer but the employer does not provide attractive opportunities, she/he often may be hired by a competitor firm. Why? . competitor firms are also interested in globalizing their business. . former expats bring instant expertise and experience . competing firms will pay a higher premium for expertise . all of these answers

21. the government taking a "hands-off" approach is known as . laissez-faire . command economy . mixed economy . liberal approach

22. expatriate managers make ideal candidates for top management positions. . true . false

23. _____are defined as rights associated with the ownership of intellectual property. . patents . trademarks . intellectual property rights

24. in a collective society: . family units are highly valued . being an entrepreneur is a popular mindset . being different than your neighbor is important . outsiders are easily trusted

25. which of the following definitions best defines an expatriate manager? . a manager who works outside his or her native country . a manager of great expertise . an ex-manager rehired for advisory purposes . none of these answers.

Paper For Above instruction

The primary costs of Foreign Direct Investment (FDI) to host countries are multifaceted and often debated within academic and policy circles. The most prominent among these are the loss of sovereignty and patriotism, adverse effects on competition and exports, and capital outflow. These concerns highlight the potential erosion of local control over economic and political decision-making, which can lead to a diminished sense of national identity and autonomy. When foreign firms establish operations within a host country, they often influence local policies and regulations, sometimes leading to a perception of diminished sovereignty. Moreover, FDI can introduce competitive pressures that threaten domestic industries, sometimes resulting in monopolistic tendencies or reduced market diversity. Additionally, profits generated by foreign firms may be expatriated back to the investor’s country, leading to capital outflow that restricts economic growth within the host nation.

Ownership theories suggest that FDI, when unrestricted by government intervention, can enable countries to tap into their absolute or comparative advantages by specializing in the production of certain goods or services. The free market view espouses that open competition and minimal government interference promote economic efficiency and global resource allocation. This perspective champions the idea that countries should focus on what they do best and engage in international trade and FDI to maximize economic gains (Dunning, 1988). The radical view, on the other hand, criticizes foreign investment as perpetuating global inequalities, often favoring multinational corporations at the expense of local interests (Amin & Thrift, 1994). Pragmatic nationalism advocates for a balanced approach, where countries selectively promote FDI to safeguard their sovereignty while benefiting from global integration (Lundan & Kurunankara, 2020).

The benefits of FDI to home countries are substantial. Repatriated earnings represent profits returned from foreign investments, bolstering the home economy. Additionally, increased exports of components and services to host countries can lead to a more integrated global supply chain, offering economic benefits to the investing nation (Kogut & Singh, 1988). Learning via FDI is another vital advantage, as firms acquire new knowledge, technologies, and management practices from international operations, improving their competitiveness globally. These combined benefits underscore the strategic role that FDI plays in enabling firms and countries to grow in a competitive global environment (Gorg & Greenaway, 2004).

When one firm moves into a foreign market through FDI, rivals tend to follow with additional investments to establish their own foothold. This strategic follow-on FDI aims to create knowledge spillovers, discover new market opportunities, and neutralize the first-mover advantage by establishing their own location-specific advantages (Model & Winner, 1987). Such competitive dynamics often lead to clustering of foreign firms within countries, intensifying industry development and innovation activities, which ultimately benefit the local economy (Cantwell & Santangelo, 1999).

Most countries adopt pragmatic nationalism, balancing the push for foreign investment with safeguarding national interests. Unlike the radical or free-market views, pragmatic nationalism promotes selective FDI policies, ensuring beneficial investments while minimizing adverse effects. Some countries may embrace a fully free-market approach, advocating for minimal restrictions on foreign investments, while others may impose regulations to protect strategic industries.

Foreign direct investment is often viewed through various theoretical lenses. FDI is sometimes seen as a reflection of firms' motivation to extend their specific capabilities internationally and to respond to market imperfections (Dunning, 1979). This motive underscores that companies seek to leverage their unique resources by entering foreign markets, thus overcoming international market failures. This view aligns with the eclectic paradigm, which emphasizes ownership-specific advantages, location advantages, and internalization benefits (Dunning, 1980).

Most countries do not practice a completely free-market approach; instead, they implement a mix of policies that reflect their economic, political, and social priorities. Governments often regulate or encourage FDI based on strategic considerations, national security, or economic development plans. Moreover, outsourcing, defined as delegating organizational activities to external suppliers in foreign countries, is a common practice that helps firms reduce costs and tap into specialized skills, illustrating the interconnectedness of international business activities (Kotabe & Helsen, 2001).

Resources and capabilities within firms include tangible assets such as physical resources and technological capabilities, which are crucial for strategic decision-making. These assets help firms compete effectively and develop market advantages (Barney, 1991). Benchmarking, the process of comparing a firm's performance and practices against industry leaders, is used to assess whether a firm has superior resources and capabilities necessary for competitive advantage (Camp, 1989).

Cultural dimensions significantly influence international business practices. For example, countries with low power distance allow subordinates to address superiors on a first-name basis, promoting open communication. Similarly, countries with low masculinity tend to have more gender role egalitarianism, fostering cooperation and less rigid social expectations (Hofstede, 1980). In collective societies, family and social networks are highly valued, influencing business relationships and management styles (Triandis, 1995).

Setting up subsidiaries abroad can serve different strategic purposes. Establishing a foreign subsidiary to perform work in-house is known as captive sourcing or foreign direct investment (FDI). Managers in different countries exhibit varying behaviors; those in low uncertainty avoidance countries tend to rely more on experience rather than strict rules, contrasting with countries that emphasize formal procedures (Hofstede, 1980). Informal institutions, including unwritten norms and social networks, influence business conduct alongside formal laws and regulations.

The United States is often classified as an individualistic society, emphasizing personal achievement and independence. Conversely, collectivist societies prioritize group harmony and family ties. In such cultural contexts, entrepreneurship may be less prominent, or social standing can significantly influence business conduct. Intellectual property rights, including patents and trademarks, are legal instruments that protect innovations and creative works, vital for fostering innovation (World Intellectual Property Organization, 2023).

Expatriate management involves sending employees abroad to oversee operations or facilitate foreign investment. When highly skilled expatriates return without adequate opportunities, they may be recruited by competitors seeking their expertise. This phenomenon underscores the importance of strategic HR practices in global business environments (Bonache & Brewster, 2001). Governments often adopt mixed economies, balancing free-market mechanisms with state intervention to regulate markets and promote economic stability (Lundvall & Nielsen, 2007).

In summary, understanding the costs and benefits of FDI, the influence of cultural and institutional factors, and strategic resource management are crucial for firms and policymakers engaged in international business. The complex interplay of these factors determines the success or failure of foreign investments and the sustainable development of host nations. Careful analysis and balanced policies can maximize the advantages of FDI while mitigating its potential adverse effects.

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