Deck 10: Multinational Corporations and Global Production

Question 1

Greenfield investment refers to

A) the purchase of existing plants and companies
B) the purchase of shares of plants and companies
C) mergers with existing plants and companies
D) the creation of new plants and companies

Answer 1

D

Question 2

Firms engage in horizontal integration in part to

A) gain more control over inputs into the production process.
B) limit government scrutiny of their activities.
C) defend or increase their market share.
D) ensure the quality of goods that reach the consumer.

Answer 2

C

Question 3

Firms engage in vertical integration

A) to internalize different stages of the production process within the firm.
B) to get behind trade barriers of other countries.
C) to compete more effectively with local firms through their subsidiaries.
D) to defend or increase their market share.

Answer 3

A

Question 4

Transfer prices are prices that

A) MNCs charge for the sale of goods and services to other MNCs.
B) MNC affiliates charge for the internal sales of goods and services.
C) MNCs charge for the sale of goods and services to host states.
D) MNCs transfer on to the consumer.

Question 5

The country with the highest level of inward FDI stock as a share of its GDP is

A) Italy.
B) the United States.
C) France
D) Japan.

Question 6

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

A) Deregulation
B) Privatization
C) Reduction of capital flow restrictions
D) New global agreements on investment protection

Question 7

Liberals are skeptical about the benefits of MNCs.

Question 8

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

Question 9

Horizontal integration is a strategy to deal with foreign investment barriers.

Question 10

MNCs use transfer prices to reduce their reported income.

Question 11

A growing number of countries are managing sovereign wealth funds together with their official currency reserves.

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

An MNC that extends its operations abroad by producing the same product or product line in its foreign affiliates pursues______________ integration.

Question 17

Singapore is an example of an ____________________ haven

Question 18

If an MNC's bargaining leverage declines after it has made an initial investment in a host state, this is evidence of the ______________________ model.

Question 19

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.

Question 20

The investment dispute resolution provisions of NAFTA's ____________ permit private investors to obtain relief directly from governments for alleged NAFTA violations.

Question 21

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

Question 22

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.

Question 23

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?

Question 24

A raft of new stories has reported on the low tax payments of some MNCs. Explain how transfer pricing might work in such efforts. Try to find a real life example and estimate how it might be using transfer pricing to lower its tax payments.

Question 25

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.

Question 26

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

Question 27

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.

Question 28

Explain the Global Value Chains approach. Examine a product such as the iphone or an Airbus and see if you can trace back where some of the different components were made. What does the supply chain location suggest about the need for state strategies and their potential efficacy in that product?

Question 29

Have NGOs had an effect on the behavior of MNCs? What is CSR, and what are the competing theoretical views regarding the value of this concept? Examine an NGO such as Greenpeace, and deconstruct its relationship with MNCs.

Question 30

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?

Question 31

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.