Explain foreign direct investment, Business Economics

Explain foreign direct investment:

1.  Identify and briefly explain three costs of foreign direct investment (FDI) for a country such as China (the home country) and two benefits of such investment for a country such as Canada (the host country)?

 

 

Case I

Case II

Case III

Case IV

 

Korea

Japan

Korea

Japan

Korea

Japan

Korea

Japan

Corn (bushels)

4

1

4

1

4

1

4

2

Wine (bottles)

1

2

3

2

2

2

2

1

2. The table shows the bushels of corn and the bottles of wine that Japan and Korea can produce from one day of labor under four different hypothetical situations. For each case identify the commodity in which Japan and Korea have an absolute advantage or disadvantage.

 (a)  From the table, indicate for each case the commodity in which each country has a com- parative advantage or disadvantage.

 (b)  Indicate for each case whether or not trade is possible and the basis for trade.

 (c)  Suppose that in Case II, Japan exchanges 4 bushels of corn for 4 bottles of wine with Korea

 I) How much does Japan gain?

II)  How much does Korea gain?

III) What is the range for the terms of trade for mutually beneficial trade?

IV) How much would each country gain if they exchanged 4 bushels of corn for 6 bottles ?of wine?

3) Compare the advantages and disadvantages of various modes of entering foreign markets.

4) You manufacture wine goblets. In mid-December, 2012 you receive an order for 10,000 goblets from Japan. Payment of ¥400,000 is due in mid-June, 2013. You expect the yen to rise from its present rate of $1 = ¥82 to $1 = ¥57 by June. You can borrow yen at 3 percent per annum. What should you do?

5) Imagine that Canada, the United States, and Mexico decide to adopt a fixed exchange rate sys- tem. What would be the likely consequences of such a system for (a) international businesses and (b) the flow of trade and investment among the three countries?

Posted Date: 2/12/2013 7:30:48 AM | Location : United States







Related Discussions:- Explain foreign direct investment, Assignment Help, Ask Question on Explain foreign direct investment, Get Answer, Expert's Help, Explain foreign direct investment Discussions

Write discussion on Explain foreign direct investment
Your posts are moderated
Related Questions
Are the terms of trade (ToT) a problem? Problem : The terms of trade (ToT) of a country fall when its import prices rise quicker than the price of its exports. Less Developed

Your project is behind schedule and you are seeing adding extra employees to the team. What would be the potential benefits and drawbacks of this approach? Given that the slipp

Question 1: "Policy can be conducted by rules or discretion.. The increased role of expectations led to some economists arguing that it would be best to force monetary policy

WHAT are relationship between them showthese relitionship with the help of digram also state relitionship between AR MR & TR.

QUESTION (a) "There is always an inverse relationship between price and quantity demanded of a good." Discuss. (b) Explain with appropriate diagram(s) the different factors

Expansionary fiscal policy happens when the government cuts spending. How?

the central problem facing a group of survivors on a ship

Flexible exchange rate system: A country is linked to other countries through two broad channels:  trade flows andfinancial flows. Trade flows pertain to movement of goods and

QUESTION ‘To assist policy makers discern e-Government initiatives in relation to their responsibility vis-à-vis other governmental issues, it is critical that the Governmen