Agenda
► Questions?
► Review
 Test 1, October 6 – Wednesday!
 Special transactions and adjustments
 Interdependent Global Economy
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WTO and Doha
Multinational Enterprise
Test 1 will be based on
the following sources:
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Wheeler et al. Chaps 1-4
Lectures up to Monday, October 4
Scan the introduction to NAICS
Californian Perspective on Regional Economic
Development Policy in Canada
Scan the CAMI site
Look over the WTO pages on the Seattle and
Doha Ministerials, paying special attention to
“Criticism, yes…misinformation, no!”
Canada’s International Trade Balance,
2001
($ 000,000)
Commodity Classification
Section I Live animals
Section II Food, feed, bev. & tobacco
Section III Crude materials, inedible
Section IV Fabricated materials, inedible
Section V End products, inedible
Special transactions, trade, exports
Other balance of payments adjustments
United States
United Kingdom
Other EEC
Japan
Other OECD
All other countries
Exports
2,394
25,723
54,558
109,058
208,566
8,119
6,221
350,908
6,574
15,727
9,482
10,925
21,023
Imports Balance
1,996
398
7,050
18,674
20,939 33,619
69,444 39,614
227,895 (19,329)
1,275
6,843
(209)
6,430
255,028 95,880
(5,290)
11,863
(7,498)
23,225
(1,104)
10,585
(7,701)
18,626
31,295 (10,272)
Source: Statistics Canada 2003, Cansim II Table 228
Special Transactions and Adjustments
Special Transactions include repairs,
personal effects, private donations, arms
and military stores and munitions, duty free
exports, postal or courier trade (of a value
less than $2000.00 CDN) etc...
► Adjustments include adjustments to import
values which include inland freight from
point of origin to the Canadian border,
prescription drugs, and exchange rate
fluctuations.
►
The Doha Round
► 4th
“Ministerial Conference” of WTO in Doha,
Qatar, November 2001
 Rejects protectionism
 Affirms role of trade in promoting development
 Committed to addressing the marginalization of
peripheral regions
 Committed to WTO as the global institution for
setting rules of trade
►But
accepts important role of regional trade
agreements
► “Doha
Declaration” sets the agenda for the
“Doha Round” of WTO trade negotiations
Multinational Corporations
► Multinational/Transnational
firms
 Firms with a significant foreign direct investment (FDI)
► Global
Firms
 Firms in which FDI rivals domestic sales
►
Text questions (p. 64):
 Is IBM really an American corporation?
► >60%
of sales outside U.S.
► >60%
of sales outside Japan
 Is Honda really Japanese?
 Is Volvo really Swedish?
► 80%
►
of sales outside Sweden
Some would say, yes, yes and yes!
Motives for Foreign Direct Investment
►
►
Market access
Access to cheap inputs (factors of production)
 Land (natural resources)
 Labour (skills, productivity and cost)
 Capital
►
Technology (clusters)
How do multinational firms
enter foreign markets?
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Exports (if motivated by market access)
Licensing
Foreign Direct Investment
 Sales and service subsidiary
 Manufacturing subsidiary
►
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Portfolio investment
Strategic alliances
►Joint
Ventures
Foreign/Foreign Joint Ventures
► CAMI
in Ingersoll (General Motors
of Canada & Suzuki Motor
Company), 1989
► 250,000 vehicles per year,
$500,000,000
► 1,700 CAW “team members” Chevrolet Equinox
Foreign/Domestic Joint Ventures
Quesnel River Pulp in Quesnel (West Fraser
Timber & Daishowa Canada), 1981
► Mill has three pulping lines which produce
300,000 air-dried tonnes per year of thermomechanical pulp
►
Forms of Foreign Direct Investment
►New
establishment:
 Greenfield site
 Brownfield site
►Acquisition of existing business:
 Single plant/single location firm
 Larger firm with multiple
establishments, domestic or TNC
THE MNC, Global Interdependence
and Regional Development
Employment creation
► Technology transfer
► Local spending
►
 Construction phase
 Operations
Local sourcing of parts, sub-assemblies,
specialized services
► Downstream services (transportation)
► Tax base
►
THE MNC, Global Interdependence
and Regional Under Development
►
Most employment may be unskilled
 Little scope for local skills development
 If wages high: indigenous [small] businesses suffer
 If wages low, exploitation
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►
Technology transfer is limited, state-of-the-art phases stay
in home country
Local spending/sourcing may be limited
 Operations linked to home country inputs
 No host country research and development
 Specialized services purchased from home country
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►
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Tax holidays limit public sector contribution
Focused on external markets not basic human needs
Impacts on environment/local resource base
Potential for sudden closure
Interdependent Global Economy
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Global finance and banking
World cities
Global communications
Next Friday we shift to more local issues
Parts 2 and 3:
 Interaction
 transportation
 and the city