GMS 522 Chapter Notes - Chapter 5: Win-Win Game, Monopolistic Competition, New Trade Theory
29 Nov 2017
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The ability to import raw materials from foreign countries also gives the firm access to a wider range of inputs than is available in its home country. These foreign sources of raw materials may provide better quality inputs or cheaper inputs which can make the multinational firm more competitive in international markets. Protectionism measures adopted by foreign governments may effectively block the multinational firms access to potentially lucrative new markets, increase the cost of doing business abroad and perhaps reduce overall revenue and profitability from overseas businesses. All countries are dependent on international trade to some extent. Mercantilism was the dominant economic philosophy from 1500 to 1750. Viewed that resources of the world were finite and for one country to advance economically it meant that another country must lose out. Country"s wealth should be measured by its stocks of precious metals. To discourage imports, state imposed tariffs and quotas.
