This paper addresses three discussion questions in international trade and investment. The first examines why Ireland attracted significantly higher levels of inward foreign direct investment than Japan, citing factors such as language, EU trade access, workforce value, and market maturity. The second evaluates how NAFTA generated economic benefits across Mexico, Canada, and the United States through job creation, lower manufacturing costs, and expanded consumer access to goods. The third question considers when European Union authorities are justified in reviewing mergers between foreign firms, arguing that oversight is appropriate primarily when monopoly risk threatens European consumers, but should not impede mergers where no such risk exists.
Inward foreign direct investment (FDI) was significantly higher in Ireland than in Japan for several reasons. First, Ireland has a favorable climate for foreign direct investment. Not only is the language and business culture easy for English-speakers to navigate, but trade inflows under the EU are virtually unlimited. The Irish government made it straightforward for companies to invest in Ireland, whereas the Japanese government maintains complex cultural and legal structures that protect its domestic markets.
Ireland's workforce offered strong value in terms of skills, education, and cost, whereas Japan's workforce — while highly skilled and educated — is also considerably more expensive. Additionally, Ireland had not seen significant amounts of FDI over the preceding several decades, making it an emerging opportunity, whereas Japan represents a more mature market for foreign direct investment.
NAFTA produced economic benefits for all three member countries. In Mexico, jobs were created as firms located factories there to take advantage of lower labor costs. Canada experienced similar gains, particularly in the auto industry. In the United States, the primary benefit was access to lower-cost goods, as reduced manufacturing costs in Canada and Mexico translated into lower prices for American consumers. Canada also benefited from this dynamic, receiving lower-cost goods not only from Mexico but from parts of the United States as well.
Mexico, in turn, gained a greater influx of available goods as a result of easier cross-border trade. As a consequence, middle-class Mexicans achieved a standard of living that began to approach that of middle-class Americans and Canadians, reflecting the broader consumer gains that trade liberalization can produce.
"When EU oversight of foreign mergers is justified"
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