EC249 Chapter Notes - Chapter 15: Royal Dutch Shell, Greenfield Project, Market Failure
Document Summary
Foreign direct investment oten involves the establishment of producion faciliies abroad. Greenield investment involves building new faciliies from the ground up: usually welcome. Cross-boarder acquisiion involves the purchase of exising business: represents 40-50% of fdi lows, oten unwelcome. Over the past decade, about 90% of world-wide fdi ouflows came from several developed naions: developing and developed naions both receive fdi inlow. Trade barriers government acion cause market imperfecion tarifs, quotas, and other restricions on the free low of goods, services and people trade barriers can arise due to high transportaion costs, especially for low value- to-weight goods. Coca-cola has a valuable asset, the secret formula . Since intangible assets are diicult to package and sell to foreigners, mncs enjoy a comparaive advantage with fdi. Mncs may undertake fdi in counies where inputs are available to secure the supply of inputs at a stable accouning price.
