Textbook Notes (368,780)
Canada (162,164)
POLI 354 (26)
Chapter 9

Power , Money and Trade - Chapter 9

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Political Science
POLI 354
Mark Brawley

Brawley Chapter 9101129 832 PM The Politics of International InvestmentReasons why international investments occurCapital scarce in some areas and abundant in others earns different rates of return depending on economy its in Holders of capital organize it into a mobile form and move it to where it is scarceFirms when investing internationally weigh todays profit maximization versus future potentials Different Forms of InvestmentReflect a combination of contemporary business practices and reactions to problems of historical erasInitial form in 1600s centred on family o Alongside investment capitalists would dispatch a son or brother to run foreign branchesrisk was lowered bc of family ties o Obstacles of communication and mercantilismMercantilisminvestment patternstrade flows closely linkedcompanies operated under limited liability principles o Control exercised through stock ownership and the firm acted as an entity unto itselfo Ownership bw stockholdersprofessional management brought in to handle company operationsdivision bw ownership and management important Portfolio Investments indirect where ownership doesnt entail direct management of the economic activity resulting from investment ie bonds stocks simple bank loansAct to bond together capitalists Mean that more capital is suppose to leave host country than went inDebtor has to pay back principalamount borrowed plus interest th 19 cBritain held distinction as chief capital holderinvestments hw increasingly fuelling creation of economic rivals Rise of USApost WWII as leader in capital The Multinational CorporationUS investments different form than portfoliodirectFDI
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