The development of an Multilateral Framework on Investment (MFI), if such a framework were to be negotiated, would represent a change in the policy-framework cluster of determinants. Although such a framework might also affect some elements of business facilitation (such as investment incentives), it would not involve significant and direct changes in the principal economic determinants. Indeed, by making Foreign Direct Investment (FDI) policies potentially more similar, an MFI would underline the importance of economic (and business facilitation) factors in determining FDI flows. The precise effect of an MFI on the policy-framework cluster of determinants would depend on its content, including definitions, scope and safeguards. Because an MFI is only a hypothesis, three scenarios, based on differing assumptions, are discussed below for purely analytical purposes. The specific implications of each scenario would vary from country to country in accordance with specific economic and developmental conditions and specific national stances vis-a-vis Continue reading
International Business Policies
Foreign Exchange Restrictions
Although the direct intervention methods referred to have influenced many exchange rates, they do not fully serve the needs of countries with a continuous shortage of foreign exchange. To supplement the direct measures many countries adopted a number of foreign exchange restrictions. Most countries have employed foreign exchange restrictions from time to time. Developing countries especially have found restrictions necessary to secure compliance with their development plans. An exchange restriction plan implies that the government restricts the uses to which the available supply of exchange shall be put. Foreign exchange may be allocated specially for the payment of import bills, interest on foreign loans, and on other specific purposes. Sometimes the restrictions prevent the use of exchange for trade with a given (unfriendly) country. In the latter case the purpose may be political, but the basic reason for most foreign exchange restrictions is the shortage of foreign exchange sufficient to Continue reading
Theoretical Perspectives on Firm Internationalization
After the World War II, there has been rapid growth in international trade in both goods and services, resulting in various transactions across national borders for the purpose of satisfying the needs of individuals and organisations. The result of this global competition has forced organisations to expand their business by finding out new markets at home and foreign countries making them ‘Transnational firms’. Transnational Corporations (TNC) is defined as a firm that has power to co-ordinate and control operations in more than one country, even if it does not own them. The significance of TNC lies mainly in its ability to co-ordinate and control different transactions within transnational production networks, ability to take advantage of distribution factors of production and ability to be flexible in locations. The growing TNCs led to various patterns and trends in international business like rapid growth in world trade and investment, cross border mergers and Continue reading
Managing Political Risk in International Business
Political environment could involve a risk to businesses, domestic and foreign. Such risk is called political risk. Political risk is that perception by the businesses that their interests will get deteriorated when certain political upheaval happens. Political risk can occur in both democracies as well as in the totalitarian set ups as well. Political Risks are of different types. There are micro and macro political risks. Micro political risk is the one that affects a particular firm or class of firms. Usually firms owned by one class of businessmen, say, the foreigners from certain country, a particular business family or region/state. Micro political risk risk can be hedged. Macro political risk affects all. There is no sparing of any business, any nationality, any trade or industry. Formulating and Implementing Strategies to deal with Political Risk The following course of action, suggested by John D Daniels and Lee H Radebaugh will Continue reading
Use of Exchange Controls to Eliminate a Nation’s Balance of Payments (BoP) Deficit
The exchange control refers to a set of restrictions imposed on the international transactions and payments, by the government or the exchange control authority. Exchange control may be partial, confined to only few kinds of transactions or payments, or total covering all kinds of international transactions depending on the requirement of the country. The main features of a full-fledged exchange control system are as follows: The government acquires, through the legislative measures, a complete domination over the foreign exchange transactions. The government monopolizes the purchase and sale of foreign exchange. Law eliminates the sale and purchase of foreign exchange by the resident individuals. Even holding foreign exchange without informing the exchange control authority’s declared illegal. All payments to the foreigners and receipts from them are routed through the exchange control authority or the authorized agents. Foreign exchange payments arc restricted, generally, to the import of essential goods and service such Continue reading
Why Should Organizations Strive for a Gender-Balanced Workforce?
Gender balance in organizations refers to the equal representation and participation of individuals of different genders in various positions and roles within the organization. Striving for gender balance is not only a moral imperative but also a sound business strategy. It has been proven that organizations with a diverse and inclusive workforce perform better than those with a homogeneous workforce. In this essay, we will discuss the importance of gender balance in organizations and the ways in which organizations can strive to achieve gender balance. The Importance of Gender Balance in Organizations Gender balance in organizations is critical for several reasons. First, it promotes equal opportunities for all individuals regardless of their gender. It ensures that all individuals have equal access to education, training, and job opportunities, which enables them to develop their skills and contribute to the organization’s success. Gender balance also ensures that the organization benefits from a Continue reading