Attract Multinational Corporations And Protect Domestic Firms (Essay Sample)
Q1. To critically analyze and discuss FOUR different policies with each of the four determinants of national competitive advantage that will attract Multinational Corporations (MNCs) and protect domestic firms in your country. (500 words)
The student is expected to incorporate four of the following policies into each of the four determinants of national competitive advantage that will attract Multinational Corporations (MNCs) and protect domestic firms in your country.
- Trade Policy
a. Export control.
c. Strategic Trade Policies.
- Foreign Direct Investments (FDIs)
- Capital Controls
- Competition Policy
The four determinants of national competitive advantage are:
- Factor conditions
- Demand conditions
- Related and Supporting Industries.
Firm Strategy and Rivalrysource..
Attract Multinational Corporations and Protect Domestic Firms
Multinational companies (MNCs) are the organizations establishing themselves in multiple countries and expanding their network with the passage of time, but the headquarters and origins of those companies lye in one state only. Both multinational companies and domestic firm go side-by-side when it comes to the welfare and prosperity of a country. No doubt, they are the primary drivers of the global economy and contribute significantly to the creation of a global labor market (Bown, & McCulloch, 2012).
Foreign direct investment can be defined as an acquisition or investment of foreign assets with an aim to manage or control them in a foreign state. Companies look for ways to attract more and more foreign investors or sponsors who could not only support them financially but also help them take one step forward in the competitive environment. If the investors are ready to invest in a particular country, then not only the multinational corporations will get benefits, but also the domestic firms will have high chances to generate lots of revenues. In such circumstances, the companies can make FDIs in a variety of ways such as buying the assets of foreign companies, investing in a new property, equipment or plant, and participating in joint ventures with an international firm (Bogensee, 2011).
Capital controls refer to measures taken by the central bank of the government for regulating the inflow and outflow of foreign capitals in a country. We must admit that these can leave a significant impact on both multinational corporations and domestic firms. For
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