Exam 10: Multinational Corporations and Global Production

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Examine China's Belt and Road Initiative and other efforts to invest in the South in infrastructure. Does it change the paradigm and results for FDI from the perspective of recipient countries in the South?

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China's Belt and Road Initiative (BRI) and other efforts to invest in infrastructure in the South have certainly changed the paradigm and results for foreign direct investment (FDI) from the perspective of recipient countries in the South. The BRI, in particular, has been a game-changer in terms of infrastructure investment, with China pledging billions of dollars to build roads, ports, and other infrastructure projects in countries across Asia, Africa, and Europe.

From the perspective of recipient countries in the South, these investments have been both a blessing and a potential challenge. On one hand, the infrastructure projects funded by China have the potential to boost economic growth, create jobs, and improve connectivity within and between countries. This can lead to increased trade and investment opportunities, as well as improved living standards for local populations.

On the other hand, there are concerns about the potential for debt dependency and the environmental impact of these projects. Many recipient countries have had to take on significant debt to finance these infrastructure projects, leading to worries about their ability to repay these loans in the future. Additionally, there have been reports of environmental damage caused by some of these projects, raising questions about the sustainability of China's infrastructure investments in the South.

Overall, the BRI and other Chinese-led infrastructure investments have certainly changed the landscape of FDI in the South. While they have the potential to bring about significant economic benefits, recipient countries must carefully consider the long-term implications of these investments and work to ensure that they are sustainable and beneficial for their populations.

The ___________ Initiative is an effort by China to build infrastructure projects around the globe.

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Belt and Road

______________ investment involves the purchase of bonds, money market instruments, or stocks simply to realize a financial return.

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Portfolio

Explain the idea behind a sovereign wealth fund and how it might be used to reduce the negative effects of the resource curse. Examine one such fund, such as that of Norway, Alberta, or Alaska and give a preliminary assessment of its effectiveness in reducing the resource curse.

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Greenfield investment refers to

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Examine a Northern countries' policies on FDI in an industry or strategic natural resource, such as those mentioned in the text in regard to China, Japan, the U.S. and Canada. From a neomercantilist perspective, defend the desirability of such restrictions against the liberal perspective.

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How do liberals, neomercantilists, and historical materialists differ in their views of what should be regulated in a foreign investment regime? Which view do you find most convincing and why? Using the MAI, explain how the debate played out.

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Firms engage in vertical integration

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Empirical studies suggest that whether MNC activities are positive or negative depends upon the situation.

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FDI __________ refers to the next accumulated value of FDI from past flows.

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MNCs use transfer prices to reduce their reported income.

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How have host country policies (in the South) toward MNCs changed over time? What explains the policy shifts?

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Countries in the North have generally become more restrictive to FDI over time.

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Take the stance of a developing country host government. Explain the debate between the liberal and the Marxist perspectives around FDI and give your opinion about which is the most persuasive and why. Be sure to use some empirical facts in your answer.

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During the past decade, most new FDI has been in new facilities and productive assets.

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Liberals are skeptical about the benefits of MNCs.

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The ____________________ is a UN-led partnership formed in the late 1990s with 10 principles on human rights, labor standards, the environment, and anticorruption designed to promote responsible global capitalism.

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What are some of the challenges for MNCs to develop in the South that do not exist in the North? Take an MNC from India or China and examine how they were able to overcome these challenges?

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What factors account for the overall increase in global FDI flows from 1970 to the present?

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Singapore is an example of an ____________________ haven

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