ib, ch7
Terms
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- foreign direct investment
- direct investment in business operations in a foreign country
- multinational enterprise
- a firm that owns business operations in more than one country
- green-field investment
- establishing a new operation in a foreign country
- foreign portfolio investment
- investments by individuals, firms, or public bodies in foreign financial instrument
- flow of FDI
- the amount of FDI investment undertaken over a given time period
- stock of FDI
- the total accumulated value of foreign-owned assets at a given time
- outflows of FDI
- flow of foreign direct investment out of a country
- inflows of FDI
- flow of FDI into a country
- gross fixed capital formation
- summarizes the total amount of capital invested in factories, stores, office buildings, and the like
- eclectic paradigm
- argument that combining location-specific assets or resource endowments and the firm's own unique assets often requires FDI; it requires the firm to establish production facilities where those foreign assets or resource endowments are located
- exporting
- sale of products produced in one country to residents of another country
- licensing
- occurs when a firm licenses the right to produce its product, use its production processes, or use its brand name or trademark to another firm. In return for giving the licensee these rights, the licensor colleccts a royalty fee on every unit the licensee sells
- internalization theory
- marketing imperfection approach to FDI, seeks to explain why firms often prefer FDI
- oligopoly
- an industry composed of a limited number of large firms
- multipoint competition
- arises when two or more enterprises encounter each other in different regional markets, national markets, or industries
- location specific advantages
- advantages that arise from using resource endowments or assets that are tied to a particular foreign location and that a firm finds valuable to combine with its own unique assets
- externalities
- knowledge spillovers
- balance of payments accounts
- national accounts that track both payments to and receipts from foreigners
- current account
- in the balance of payments, records transactions involving the export or import of goods and services
- Organization for Economic Cooperation and Development
- a Paris-based intergovernmental organization of "wealthy" nations whose purpose is to provide its 29 member states with a forum in which governments can compare their experiences, discuss the problems they share, and seek solutions that can then be applied within their own national contexts
- Multilateral Agreement on Investment (MAI)
- an agreement that would make it illegal for signatory states to discriminate against foreign investors; would have liberalized rules governing FDI beteen OECD states