Foreign Direct Investment Factors

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What type of business arrangement involves the sale of the right to use intellectual property or manufacture a product for royalty?

Franchising

Joint Venture

Establishing a branch

Licensing (correct)

Which of the following is NOT a characteristic of globalization?

The integration of world economies

The importance of sound macroeconomic policies (correct)

The increasing connectedness of world cultures

The existence of a market economy

What is the primary purpose of a joint venture?

To facilitate the flow of goods and services

To establish a branch in a foreign country

To sell intellectual property rights

To pool resources for a specific task or project (correct)

What is the term for the discovery of the New World in 1492, which marked the beginning of the first stage of global development?

Globalization 1.0 Signup and view all the answers

Which type of business arrangement involves conducting business as an independent branch of the franchisor?

Franchising Signup and view all the answers

What is the term for a certain percentage of sales paid to the licensor for the use of intellectual property or a product?

Royalty Signup and view all the answers

According to the World Health Organization, what are the two interrelated elements of globalization?

The opening of international borders and changes in institutions and policies Signup and view all the answers

What type of business arrangement involves maintaining an office in a foreign country?

Establishing a branch Signup and view all the answers

What is the primary focus of international business and trade?

The buying, selling, or exchange of goods and services Signup and view all the answers

What is the objective of trade agreements or treaties?

To promote international cooperation in trade Signup and view all the answers

What is corporate social responsibility primarily concerned with?

The obligation of businesses to society and the environment Signup and view all the answers

What is international investing an example of?

Buying global financial instruments or foreign direct investment Signup and view all the answers

What are the three components of the triple bottom line?

Profits, people, and the planet Signup and view all the answers

What is the formula for calculating total trade?

Exports + imports Signup and view all the answers

What is the primary objective of technology transfer?

To convey scientific research results to the marketplace Signup and view all the answers

What is globalization closely related to?

The principles of international trade Signup and view all the answers

What is a Wholly owned subsidiary?

A company whose common stock is 100% owned by the parent company Signup and view all the answers

What is the term for the creation of products or services for the global market by adapting them to local cultures and environment?

Glocalization Signup and view all the answers

What is the Philippines-Japan Economic Partnership Agreement (PJEPA)?

A bilateral free trade agreement between the Philippines and Japan Signup and view all the answers

What is an example of a rebellious reaction to globalization?

Fostering a resistance identity defending local history, traditions, and authentic cultures Signup and view all the answers

What is an example of glocalization?

McDonald's replacing its familiar Ronald McDonald mascot with Asterix in France Signup and view all the answers

What is the term for the period of globalization from about 1800 to 2000?

Globalization 2.0 Signup and view all the answers

Which of the following European countries is NOT a member of the European Free Trade Association (EFTA)?

France Signup and view all the answers

What year did the free trade agreement between the Philippines and the European Free Trade Association (EFTA) take effect?

2018 Signup and view all the answers

Study Notes

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.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz covers the factors that attract foreign direct investment, including the spread of technology, strong institutions, and more. Test your knowledge on what makes a country an attractive destination for foreign investors.