Discuss the key motives behind foreign direct investment

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1) Discuss the key motives behind foreign direct investment. Compare (statistically) the FDI of US corporations with those of foreign multinationals in the US. Why do many emerging-market economies welcome FDI by US multi-nationals in their economy?

2) Why are multi-national enterprises a source of conflict in their home country? In their host countries?

3) Give four examples of US credit (+) transactions, followed by four examples of US debit (-) transactions! Pick one transaction from each of these two categories and describe either in terms of its double-entry book-keeping logic as well as how it gets paid for in the international payments process!

4) Discuss the structure of the balance of payments in terms of its different accounts (and their respective sub-accounts)! How is the US currently faring in terms of its balance of payments with the rest of the world? Why is the US not like any other debtor nation?

5) Discuss (and, if possible, give contemporary examples of) exchange-rate quotations, in terms of spot rates, forward rates, real exchange rates, effective exchange rates! What happens when a currency depreciates against another currency?

6) I would like you tp discuss the key determinants of exchange rates. In that discussion please make sure to distinguish between the different (long-term, medium-term, and short-term) time horizons of exchange-rate determination.

7) Under what conditions (see Marshall-Lerner Condition) will a depreciation effectively help reduce a country's trade deficit? What is the J-curve and how does its presence in effect alter (or perhaps even undermine) this adjustment process?

8) Compare (by listing and assessing the pluses as well as the minuses) of flexible exchange rates versus fixed exchange rates! How do countries decide which exchange-rate regime to pursue?

Reference no: EM131314762

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