With the ongoing globalization, it is more and more important to take a look at firms that are active on international markets. To understand, which circumstances influence the decisions of multinational enterprises went into the focus of analysis of the new trade theory. This paper gives attention to Multinationals and horizontal foreign direct investments. The Analysis starts with the requirements of firms to implement internationalization strategies, worked out in the OLI framework.
First, the relevance of the intra-firm-trade that occurs with or by foreign direct investments, as a part of international trade, will be highlighted.
Second, the general conditions, under which multinationals act on international markets, will be pointed out. Third, the author discusses the way how decisions of firms and governments interact and influence each other.
Because the focus of this paper is on horizontal multinationals, it concentrates on those parts, which determine the decision of firms to engage in horizontal foreign direct investments and the closely related choice of location.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Multinationals and Organization of the Firm
- Ownership Advantages
- Internalization Advantages
- Location Advantages
- Role of the Traders
- International Trade is Inter-Firm-Trade
- The Influence of Foreign Direct Investments
- Impact of Trade Policies on MNE location
- Free Trade in the Two-Sector Heckscher-Ohlin Model
- Specific Import Tariff in the Two-Sector H-O Model
- Decision between export and HFDI
- Resume
- References
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper analyzes the role of multinational enterprises (MNEs) and horizontal foreign direct investments (HFDI) in the context of globalization. It explores the factors that influence the decisions of MNEs to engage in internationalization strategies, particularly focusing on HFDI. The paper highlights the importance of the OLI framework, which considers ownership, internalization, and location advantages for firms.
- The decision-making process of multinational enterprises (MNEs)
- The role of horizontal foreign direct investments (HFDI) in international trade
- The OLI framework and its application to multinational activities
- The influence of trade policies on MNE location choices
- The relationship between export and HFDI strategies
Zusammenfassung der Kapitel (Chapter Summaries)
The paper begins by introducing the concept of multinational enterprises and their increasing significance in a globalized world. It then delves into the OLI framework, explaining the three key advantages that drive a firm's decision to internationalize: ownership, internalization, and location advantages.
The chapter on the role of traders emphasizes the importance of inter-firm trade and the influence of foreign direct investments on this dynamic. It explores how firms, particularly MNEs, operate within international markets and the interplay between their decisions and those of governments.
The paper further examines the impact of trade policies on the location choices of multinational enterprises. Specifically, it analyzes the implications of free trade and specific import tariffs within the two-sector Heckscher-Ohlin model.
Chapter five delves into the complex decision-making process involved in choosing between export and HFDI strategies. This chapter presents models and analyses that help understand the factors that influence a firm's choice of internationalization strategy.
Schlüsselwörter (Keywords)
The primary focus of this paper lies on the role of multinational enterprises, horizontal foreign direct investments, and their influence on international trade. Key themes include the OLI framework, ownership advantages, internalization advantages, location advantages, trade policies, and the decision-making process involved in choosing between export and HFDI strategies.
- Quote paper
- Kieran MacInerney-May (Author), 2005, Multinational and Horizontal Foreign Direct Investment, Munich, GRIN Verlag, https://www.grin.com/document/51816
