ipl-logo

Theories Of Global Investment

3382 Words14 Pages

Local and global investments are the cornerstone in any economy being key factors for the creation of businesses and employment and for their conservation.
Today, in the modern international economy, investments often come from overseas and it is also what happens in the EU. The companies are investing to create global value chains that generate new business opportunities but also added value, competitive advantage, jobs and income.
Trade agreements promote investment and create new investment opportunities for companies around the world.
The process of economic globalization is at an advanced stage and it is no exaggeration talking about the global village. Globalization has led to a reduction of barriers between countries over time. Due to …show more content…

These three theories are: the theory of the International Market, the theory of Foreign Direct Investment (FDI) and the theory of the Life Cycle of the product.
1. Meier suggests, through the theory of the International Market , that nations derive income from the international market by importing and exporting activities.
The gains derived from a comparative advantage that comes from exporting those higher value goods that the country has.
The benefit derives from the natural resources in the country, due to better quality of land or from more favorable climatic conditions, labor costs, capital flows, technological advantage, etc.
In general, countries take advantage from the international market when exporting the products in which they specialize as they have a comparative advantage and import goods in which they have a comparative disadvantage.
2. The second theory is that of the Foreign Direct Investment (FDI). This theory focuses on the MNCs who decide to expand into a foreign market and it is focused on three main factors: the change of geographical horizons, the possession of a specific competitive advantage and the benefits derived from the location of the new host …show more content…

Ex: Nutella or Ferrero Roche products were designed for the Italian market and now are distributed worldwide can represent an example.
b) The second phase, called the growth of the product corresponds to the affirmation of the product in the market and the resulting copy of the product from competitors usually taking advantage of lower production costs in NICs, such as the counterfeiting of Ferrero Roche that was not produced in Italy or Australia but in China and distributed in the Asia - Pacific.
c) The third phase called standardization and decline refers to the industry that will be able to have the lowest cost of production will be the one that will be successful in the market.
A great example is the market for rice crackers in Australia and around the world. The product was invented and produced for the first time in the Japanese

Show More
Related

  • Annotated Bibliography

    472 Words  | 2 Pages

    A global economy also means that those interdependences concern more and more countries, in particular EMC’s countries, that turned away from isolation and opened to internationalisation in the last decades. Regarding IMF, even if FDI flows to emerging market countries (EMCs) have decline owing largely to falling investment in Latin America, they increase rapidly since the 1990’s and have become by far the single largest component of their net capital inflows. This last example shows how countries are now more than ever tie together.

    Read More

  • Case Study Qnt 561 Week 3 Tax Trouble

    1218 Words  | 5 Pages

    Question 4.2 Advantage of bilateral and regional trade agreement 1. Bilateral and regional trade agreements increase trade between the two countries. They open markets to successful industries. As companies benefit, they add jobs 2. They are easier to negotiate than multilateral trade agreements since they only involve two

    Read More

  • Advantages Of Globalization In Ecuador

    922 Words  | 4 Pages

    One if the greatest advantage is transferring new technology between countries, which is incredibly beneficial for the development of nations. One of the biggest disadvantages is precisely when easy access to incoming technology is not allowed. Take for instance Ecuador, a developing country, which products cannot compete with those from developed countries in terms of quality, advanced technology, know-how, and price. In order to stimulate local consumption and decrease the amount of money transferred abroad, Ecuador’s government has set several policies, which has considerable effect on imports. Some of those policies are: imports quota and tariff safeguards.

    Read More

  • The Impact Of Globalization On Apple

    1025 Words  | 5 Pages

    Globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology. This process has effects on the environment, on culture, on political systems, on economic development and prosperity, and on human physical well-being in societies around the world. The most common example of globalization might be Ebay or Amazon. Nowadays flows of goods and services are not only cheap and fast, but reliable and secure.

    Read More

  • Differences Between Globalism And Nationalism

    825 Words  | 4 Pages

    Economic benefits further advance the global economy, “Businesses can communicate efficiently and effectively with their partners, suppliers, and customers and manage better their supplies, inventories, and

    Read More

  • Pricing Strategy Of Walmart

    708 Words  | 3 Pages

    But gradually as the product lifecycle grows , they lower the price of the product. • Establish the

    Read More

  • Airbnb Case Study Globalization

    1557 Words  | 7 Pages

    3. Globalization Throughout the last decades, globalization became a real phenomenon, but history tells us that it is actually not a new social, historical phenomena, but has, under different names and manifestations, been with us for a long time. It is actually not only the continuation of the liberalization of international trade, which began in the mid-19th century with the launch of cross-border trade over long distances and later with intensive large-scale mobility of labor and capital. During capitalism, globalization has amplified due to the lust for profit, which is driven by capitalists across the globe. Indeed, globalization has significantly strengthened ever since.

    Read More

  • Walt Disney Product Life Cycle

    1009 Words  | 5 Pages

    Before the product enters the market, there are no sales, as the product is being prepared for the market. There is market research that is being conducted. Introduction stage begins with the launching of the product followed by growth where there is an increase in the market share. When the product reaches maturity stage, the sales are at their peak. At the decline stage, the sales are declining.

    Read More

  • Two Neoclassical Trade Theories

    890 Words  | 4 Pages

    If two countries specialize in production of different products (in which each has an absolute advantage) and trade with each other, both countries will have more of both products available to them for consumption. 2.2. Neoclassical Trade theory This is also known as Comparative Advantage. (David Ricardo1817) stated that even if one country has an absolute advantage in producing two products over another country, trading with that other country will still yield more output for both countries than if the more efficient

    Read More

  • The Causes Of Globalization In Europe In The 20th Century

    1193 Words  | 5 Pages

    Throughout the twentieth century, countries were creating treaties, trade blocs and global governance institutes to promote open market and free trade. Europe’s golden age of trade with very low tariff and high economic development began mid-19th century and collapsed

    Read More

  • Advantages And Disadvantages Of Global Trade And International Trade

    998 Words  | 4 Pages

    Firstly, by doing export process sales for that country will increase. Exporting process is a one way to expand business and increase company sales potential. It can help expand product or services that the company earn money form, otherwise the company stuck trying to make a money only in the local market. As example ‘The Tarik’, the Tarik one of the famous beverages in Malaysia but people from other country can get it at their own country. In this case we can see that globalization give an idea for local business to expands and sell the product to other country by doing export process and its became well known for a few country which Singapore, Indonesia, Europe and

    Read More

  • The Impact Of Globalization In Germany

    1127 Words  | 5 Pages

    Introduction Nowadays people can communicate easily. They can share their ideas, their cultures even with people who are not in their countries. They can trade, transporting products around the world in just a few days. This is a big economy where everything related to each other. This is globalization.

    Read More

  • Kosovo And Globalization Essay

    750 Words  | 3 Pages

    The term “Globalization” has been in existence for the past 50 years. It is one of the major causes of the increase in international trade. The Oxford Dictionary defined Globalization as “the process by which businesses or other organizations develop international influence or operate on an international scale”. It is a phenomenon that has been in the front burner for several years. Certain individuals opine that it serves as an advantage for the developing countries to compete in the global market while others were of the opinion that it favors the developed countries by making them richer (Giddens, A. 1999).

    Read More

  • Disadvantages Of Globalization In Developing Countries

    805 Words  | 4 Pages

    First of all, the most obvious advantage that the globalization brings about is that goods (such as car, laptop, smartphone, etc.) produced in one country can be sold in other countries .For the developed countries, now the can easily export their products and services to other countries to earn money. And for the developing countries, it can create opportunities of employment and reduce poverty, which is very good for the economy. The next positive aspect which is taken into consideration is that the developing countries now can receive sources of capital, new technologies from developed countries, which is very essential for the growth of a country. And in return, the developing countries let the developed countries’ companies do business in their countries.

    Read More

  • Reflection On Globalization

    731 Words  | 3 Pages

    Then I will state the links between globalization and some of the other lectures that we have covered this year, I chose this lecture because it’s one of the most important parts of any business environment worldwide, globalization has also introduced many developments such as internationalization, liberalization etc. Topic Discussion: Globalization has opened the doors between all businesses and countries worldwide, it has created connections without boundaries and a global exchange of information, cultures etc. It has widely increased the flow of money exchange and foreign investments in countries, and created an involvement between different people in many political, social and economical activities. Changing world politics, technological

    Read More

More about Theories Of Global Investment

Open Document