Agenda: The Last Class
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Last day:
• Strategic Alliances
• Economic landscape
• TNCs & States
Today:
• Exam
Exam: Thursday April 21
2:00-5:00 in B-650 (here)
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Chaps 7-9, 18
Chaps 10-14 + stockyards
Student seminars
Chaps 5-6 in support of the above
Structure of Final Exam
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A. 10 multiple choice questions, 5 choices no penalty for
incorrect responses
10@2=20
B. 4 short essay questions from a choice of 7.
4@10=40
Two-three concise paragraphs.
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C. Industry Essay: 1 essay from a choice of three.
1@20=20
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Excluding your seminar topic!
D. Conceptual Essay: 1 essay from a choice of three
1@20=20
TNCs & Host Economies
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Potential Areas of Conflict:
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Capital
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Technology
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Trade and linkages
Concentration
Employment
• Transfer pricing
• ‘Know-how’ but not ‘know-why’
• Appropriate technology
• Exploitation
• Impact on indigenous enterprise
TNCs & Home Economies
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Employment impact of Outward Investment
NE   DE  XE  HE  SE
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Where:
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NE is net employment effect
DE is production displacement effect
XE is production of goods for export
HE is home office effect
SE is supporting firm effect
Bargaining Power: TNCs & States
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Upon entry
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To reduce exit
• Michelin bill
• Subsidiaries “vote with their feet”
• Obsolescing bargain
Locational Tournaments
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Macromarketing
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Competitive bidding for investment
• Business climate
• E.g. no subsidies for Lethbridge beef plant!
• But provincial program provides 1/3 of
infrastructure costs in communities <40,000
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Competitive bidding to prevent
disinvestment
Winners & Losers:
Cutting edge and the bleeding edge
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Transformation of the geo-economy as a
product of three forces:
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TNCs: control, coordinate, collaborate
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States: Regulators via policies/programs
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Technology: Enabling force, learning process
• Switching capital
• But no single global form
• Indeed few truly global firms
• Trade
• FDI
• Industry
Impacts of Globalizing Processes
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Distributional inequalities
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Quintiles
Development gap grows wider
Stunning geographical contrasts
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GDP, trade, FDI, communications
Population growth
Age structures
Migration
Employment opportunity
Making the World a Better Place
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Candide and Dr. Pangloss
• “The best of all possible worlds where
everything is connected and arranged for the
best”
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Neo-liberals would agree
Antiglobalization forces
Global Governance Structures
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International Regulatory bodies
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International Coordinating Groups
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Regional Blocs
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National bodies
Local and regional agencies
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• IMF and WTO
• G7
• EU , NAFTA, Mercosur
World Governance
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International finance
International Trade
TNCs via OECD’s MAI
• Mutilateral Agreement on Investment
Labour standards
Environmental concerns
International Finance
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Bretton Woods NH
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Back drop of post-war depression
Goal to stabilize
Fixed exchange rates – US$
IMF
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To enable foreign exchange
To assist with BoP problems
SDRs
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To finance development
IBRD → WB
Bretton Woods has collapsed
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Floating exchange rates,
From government-led to market-led yet…
World Trade
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Depression and protectionism
Comparative advantage
GATT and Uruguay Round
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GATS (Trade in Services)
TRIPS (Intellectual Property Rights)
TRIMS (Investment Measures)
WTO – Jan 1995
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Rule oriented
Not performance oriented
World Trade
• MFN Principle
• Non discriminatory application of trade principles
• But Supranational trading blocs exempt
• Concessions to developing countries
• Doha Round
• Agriculture
TNCs
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TRIMs
• Created by Uruguay Round, 1994
• Prevent restrictions on inward FDI
• Supported by?
• U.S.
• Opposed by
• Developing countries
TNCs
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OECD Initiative
MAI – Multilateral Agreement on Investment
• Open all sectors to FDI
• Foreign firms to be treated same as domestics
• Unrestricted capital movements
• Firms can sue local governments for damages
• All states must comply
Dead or just dormant?
TNCs
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New Era of Corporate Awareness
Self policing
• Social responsibilities
• Good corporate citizenship
• Voluntary Codes of Conduct e.g.
• Fair trade coffee
• Blood diamonds
• McDonald’s and Animal Welfare/Stunning Audits
• Nike and The Gap
Industrial Location and
Globalization of Enterprise
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Tools for Thought
• Observation
• Representation
• Interrogation
• Presentation