Explain foreign direct investment, Business Economics

Assignment Help:

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?


Related Discussions:- Explain foreign direct investment

Finacial Fiasco Book Review, Can anyone type me a paper on the book financi...

Can anyone type me a paper on the book financial fiasco? I will provide with a link to the book.

Do you agree with what dick brandon said regarding sex, Do you agree with w...

Do you agree with what Dick Brandon said regarding sex? Do not take this question too seriously! Even though the quotation had a humorous intention, this does highlight a serio

Implement intellectual property right, Question: a) Distinguish betwee...

Question: a) Distinguish between the orthodox and the heterodox perspectives for implementing Intellectual Property Rights (IPRs). b) Patenting has been subject to much co

Calculate the maximum amount , Tri-City Industries is considering two possi...

Tri-City Industries is considering two possible capital projects. Project A requires an initial investment of $240,000 and provides cash flows before tax of $120,000 in year one, $

Calculate the new money multiplier, The reserve requirement is 20%. Assumin...

The reserve requirement is 20%. Assuming banks have no desire to hold excess reserves, calculate the money multiplier. Now assume the banks want to hold 20% of their reserves in ad

Evaluate identical cash flows, Problem: (a) Companies A and B differ on...

Problem: (a) Companies A and B differ only in their capital structure. A is financed  by  30 percent debt and 70 percent equity; B is financed 10 percent debt and 90 percent eq

Elesticity, elasticity concept occupies a central place in policy formulati...

elasticity concept occupies a central place in policy formulation

Change in currency rate, Change in Currency Rate Change in the sterlin...

Change in Currency Rate Change in the sterling currency rate has also great consequences because it depends upon the sterling currency rate to the other countries as well. As

Economic systems, the markert is said to be an invisible hand in the econom...

the markert is said to be an invisible hand in the economic system , how

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd