The main objective of this scientific paper is to define the role of Multinational Companies (MNC) in the international trading system. It is to be shown which effects the contrary trade policies free trade and protectionism have on international trade and the investment behaviour of MNC. The opportunities and risks of FDIs should be identified from the perspective of the MNCs and investment countries.
The scientific paper thesis contains five chapters. Key terms and the relation between MNC and international trade will be defined in chapter two. At the beginning of chapter three, the Heckscher-Ohlin Model will be explained. Then theorems based on this international trade theory will be used to explain the cause and effects of international trade.
In the fourth chapter, the different motives of free trade and protectionism and their effect on FDIs will be examined. The potential chances and risks of FDIs for the investment receiving countries and MNCs are then discussed. In the last chapter, the key findings of this paper are summarized. The paper ends with a conclusion and an outlook, where further significant research needs are addressed.
Companies are forced to permanently increase their efficiency and effectiveness in all functional areas to stay competitive. In today´s competition, it is almost impossible to avoid the international markets, especially for large enterprises. The strong internationalisation of the global economy over the past decades can be attributed to the increased volume of goods, services and technologies traded internationally. There has also been a strong increase in foreign direct investments (FDIs). However, the trend over the last decade has gone in the opposite direction, especially for developed countries.
The General Agreement on Tariffs and Trade (GATT) is intended to provide a basis for free international trade, but an increasing number of national laws and regulations lead to a multitude of trade barriers. The growing use of customs and other instruments of protectionism, particularly by the industrialised countries, is one of the central unsolved problems of international trade. These measures aim to preserve national advantages at the expenses of the wealth of the global society.
Table of Contents
- Increasing protectionism endangers the global wealth
- Multinational Companies and different types of foreign direct investments
- The role of Multinational Companies in international trade
- Scope and types of foreign direct investments
- Impact and cause of International Trade explained with the Heckscher-Ohlin Model
- The Heckscher-Ohlin Model
- Impact of international trade based on the HOM
- Impact of MNC and their FDIs based on different forms of trade policy
- Trade policies and their effect on FDIs
- Impact of FDIs from MNC on foreign countries
Objectives and Key Themes
This seminar paper aims to define the role and impact of multinational companies (MNCs) and their activities on international trade and foreign direct investments (FDIs). It uses the Heckscher-Ohlin model to explain the causes and effects of international trade and investigates the influence of various trade policies on MNC investment behavior and the effects of FDIs on recipient countries.
- The role of MNCs in international trade
- The impact of foreign direct investment (FDI) on global trade
- The Heckscher-Ohlin model and its application to international trade
- The influence of trade policies on MNC investment decisions
- The effects of MNC FDIs on host countries
Chapter Summaries
Increasing protectionism endangers the global wealth: This chapter likely introduces the context of the paper, highlighting the recent decrease in foreign direct investment (FDI) volume despite decades of growth. It sets the stage by emphasizing the rising trend of protectionist trade policies and their potential negative consequences for global economic prosperity. The chapter probably argues that this trend negatively impacts the global economy and serves as a critical backdrop for the subsequent analysis of MNCs and their role in international trade.
Multinational Companies and different types of foreign direct investments: This section delves into the definition and various types of foreign direct investments undertaken by multinational corporations (MNCs). It analyzes the pivotal role that MNCs play in facilitating international trade, exploring their market strategies and the mechanisms through which they contribute to global economic integration. The chapter likely differentiates between various forms of FDI, emphasizing their distinct characteristics and implications for international trade flows and global economic dynamics. It could also discuss the different motivations behind MNCs' foreign investments.
Impact and cause of International Trade explained with the Heckscher-Ohlin Model: This chapter uses the Heckscher-Ohlin model (HOM) as a theoretical framework to explain the causes and consequences of international trade. It likely provides a detailed description of the HOM, including its assumptions and core principles. The chapter then applies the model to analyze how differences in factor endowments (e.g., capital, labor) across countries drive trade patterns and their respective impacts. A key focus may be on the model's predictions regarding the distribution of gains from trade and its validity in explaining real-world trade flows, along with potential limitations or extensions.
Impact of MNC and their FDIs based on different forms of trade policy: This section analyzes how various trade policies influence the investment decisions of MNCs and the subsequent impacts on host countries. Different types of trade policies—such as tariffs, quotas, and subsidies—are likely examined in terms of their effects on FDI flows. The analysis might also investigate the impact of FDI from MNCs on recipient countries, considering factors such as economic growth, employment, technological transfer, and potential negative externalities. The chapter may consider the interplay between trade policies and the strategic decisions of MNCs regarding foreign investment.
Keywords
Multinational companies, foreign direct investment (FDI), international trade, trade policies, Heckscher-Ohlin model, global wealth, protectionism.
Frequently Asked Questions: A Comprehensive Language Preview
What is this document about?
This document is a comprehensive preview of a seminar paper focusing on the role and impact of multinational companies (MNCs) and their foreign direct investments (FDIs) on international trade. It examines the influence of protectionism, utilizes the Heckscher-Ohlin model to analyze trade patterns, and investigates how various trade policies affect MNC investment decisions and their consequences for host countries.
What are the key themes explored in the paper?
The key themes include the role of MNCs in international trade, the impact of FDI on global trade, the application of the Heckscher-Ohlin model to international trade, the influence of trade policies on MNC investment decisions, and the effects of MNC FDIs on host countries. The rising trend of protectionism and its potential negative impact on global wealth is also a central theme.
What is the structure of the paper?
The paper is structured into four main chapters: 1) Increasing protectionism endangers the global wealth; 2) Multinational Companies and different types of foreign direct investments; 3) Impact and cause of International Trade explained with the Heckscher-Ohlin Model; and 4) Impact of MNC and their FDIs based on different forms of trade policy. Each chapter is summarized in the preview.
What is the Heckscher-Ohlin Model and how is it used in this paper?
The Heckscher-Ohlin model (HOM) is an economic model used to explain the causes and consequences of international trade based on differences in factor endowments (like capital and labor) across countries. The paper uses the HOM to analyze how these differences drive trade patterns and their impacts on participating nations.
How does the paper address the impact of trade policies?
The paper examines how various trade policies (tariffs, quotas, subsidies, etc.) influence the investment decisions of MNCs and their subsequent impact on host countries. It analyzes the effects of these policies on FDI flows, economic growth, employment, technological transfer, and potential negative externalities in recipient countries.
What is the role of Multinational Companies (MNCs) according to the paper?
The paper highlights the pivotal role of MNCs in facilitating international trade and their significant contribution to global economic integration. It explores their various investment strategies and the different types of foreign direct investments (FDIs) they undertake.
What are the potential negative consequences discussed in the paper?
The paper emphasizes the potential negative consequences of rising protectionism on global economic prosperity and the potential negative externalities associated with MNC FDIs, although it also acknowledges the positive impacts of FDI on host countries (such as economic growth and technological transfer).
What are the key terms used in this paper?
Key terms include: Multinational companies, foreign direct investment (FDI), international trade, trade policies, Heckscher-Ohlin model, global wealth, and protectionism.
- Quote paper
- Anonym (Author), 2020, Multinational companies. Their role in and impact on international trade and investments, Munich, GRIN Verlag, https://www.grin.com/document/1010355
