International Business

Ch 7 DQ #1. Inward FDI was significantly higher in Ireland for a couple of reasons. One is that the nation has a favorable climate for foreign direct investment. Not only is the language and business culture easy for English-speakers to understand, but trade inflows under the EU are virtually unlimited. The Irish government made it easy for companies to invest in Ireland; the Japanese government has complex cultural and legal structures to protect its markets. The Irish workforce was good value in terms of skills, education and cost, whereas Japan's workforce is highly skilled and educated but also expensive. Additionally, the market had not seen significant amounts of FDI for the past several decades, whereas Japan is more of a mature market for FDI.

Ch 8 DQ#1. NAFTA has produced benefits for all three countries. In Mexico, jobs have been created as firms locate factories in Mexico to take advantage of lower labor costs. Canada has seen some of these benefits as well, particularly in the auto industry. In the United States, the primary benefit has been lower cost goods, as the lower manufacturing costs of goods produced in Canada and Mexico benefits Americans in the cost of lower prices. Canada, too, sees this benefit, with lower cost goods coming not only from Mexico but parts of the U.S. Mexico sees a greater influx of goods available as a result of easier trade, such that middle-class Mexicans now have a standard of living that approaches those of middle-class Americans and Canadians.

Ch. 8 DQ#4. It is correct for European authorities to review mergers of foreign firms that do business in Europe, but only from the context of protecting European consumers against monopoly abuses. Europe still has its own firms but over time, as it opens its markets, foreign firms may become dominant if they have a comparative or competitive advantage over European firms. If the European market is dominated by foreign firms, then the EU has the right to guard against monopoly. However, if the EU is not in a situation where monopoly could occur as a result of the merger, then it is of little consequence to them what two foreign firms do. In that situation, the EU should not be able to hold up such a merger.