Foreign Direct Investment Factors

Types of Investments

• Licensing: a contractual arrangement where the licensor sells the right to use intellectual property or manufacture a product to the licensee for royalty.
• Franchising: a contractual arrangement in which the franchisor permits the franchisee to use the business model or brand name for a fee.
• Joint Venture (JV): a joint undertaking by two or more parties, which otherwise retain their distinct identities, to accomplish a specific task or project.
• Wholly Owned Subsidiary: a company whose common stock is 100% owned by the parent company.
• Establishing a Branch: maintaining an office in a foreign country.

Globalization

• Globalization: the increasing connectedness, integration, and interdependence of world cultures, economies, politics, and environment.
• Globalization 1.0: started with Columbus’ discovery of the New World in 1492.
• Globalization 2.0: from about 1800 to 2000, was largely shaped by the emerging power of huge multinational corporations.
• Globalization 3.0: began around 2000 with advances in global electronic interconnectivity through the internet.

Glocalization

• Glocalization: the creation of products or services for the global market by adapting them to local cultures and environment.
• Opportunistic reaction: creating hybrids, where mixed cultures take advantage of the opportunities provided by international business and trade.
• Rebellious reaction: fostering a resistance identity defending local history, traditions, and authentic cultures.

International Business and Trade

• International business and trade: any activity or endeavor among nations around the globe involving the buying, selling, and exchanging of goods, services, capital, labor, resources, technology, and the like.
• Trade: a basic economic concept involving the buying, selling, or exchange of goods and services.
• Types of business: international investing, exporting, importing, and labor migration.
• Trade agreements or treaties: contractual arrangements between countries concerning their trade relationships.

Other Concepts

• Triple bottom line (TBL): profit (economy), people (society), and the planet (environment).
• Corporate social responsibility: businesses have an obligation to society and the environment beyond what is prescribed by law and above making a profit.
• Technology transfer: the process of conveying results stemming from scientific and technological research to the marketplace and a wider society.
• Foreign direct investment: a firm is investing assets directly into a foreign country’s buildings, equipment, or organizations.
• Philippines-Japan Economic Partnership Agreement (PJEPA): the first bilateral free trade agreement of the Philippines, signed in 2006.