INR 4702 Chapter Notes - Chapter 9: Corporate Social Responsibility, National Treatment, Extraterritoriality
29 Dec 2017
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Document Summary
During each phase, di erent types of economies have a comparative advantage in the production of the product. Phase 1: located in the most technologically advanced country. Foreign demand for the product rises and they begin to export. Over time, the growth of foreign demand, the di usion of technology to potential foreign competitors and rising trade barriers make foreign production feasible and necessary. Phase 2: manufacturing processes continue to improve and the locus of production tends to shift to other advanced companies. Phase 3: standardization of the manufacturing process allows production to shift to ldcs in order to take advantage of lower wage rates; from there, products are exported back to developed countries. How mncs minimize risk of doing business abroad. Place di erent stages of production (vertical integration) or factories (horizontal integration) in di erent countries. Building linkages w/ local suppliers, distributors, and consumers. The initial investment agreement will strongly favor the mnc over the host state.
