英语论文网

ever, the crisis has shown that China is overly dependent on its investment and exports for economic growth. The 12th Five Year Plan of China shown the changed focus of policy for China to reform from this export-investment heavy model to household consumptions, and there are problems that has to be conquered along the path of rebalancing, and the process would inevitably slow down China’s economic growth. The view that China’s economy will overtake that of the United States is a constant debate with no definite answer. In my opinion, the success of rebalancing and reforming the economic structure would allow China to become a leader of the world’s economy.

Topic 3

Assess the assumption that firms will seek to move their production (of goods and services) to other countries with lower wage costs. What factors might affect how ‘footloose’ software development is?

With the ongoing globalization, foreign direct investment is one of key drivers. Growing interdependency and cross broader investments had created a new complex economy for today’s world. This essay will access the assumption that firms will seek to move their productions of goods and services to lower cost countries, evaluate the advantages of firms that encourages offshoring or outsourcing, and emphasis specifically on the software development industry.

To begin with, foreign direct investments refer to the direct investment into production assets or business from a home country to another host country. In other words, it also refers to that an enterprise has set up long term relationships with a foreign company and process control rights and equity stake, including outsourcing and offshoring. In this competitive world, firms would exploit in every way they could to maximize their profit and/or to defeat their rival companies. The strategies of these firms to place their productions or other kind of FDI to other countries can be rationale by the fact that it allows better distribution of the firm’s resources to invest in where ever has the best prospect for growth. The main drivers of the FDIs may be explained by advantages of investing in those host countries.

One of the most important aspects of driver is the location-specific advantage. This refers to the ability for a company to conduct its business better for reasons related to the location. As the political and economic conditions differs places to places, firm could analysis the variations in markets, politics and cost of production before investing or moving their business to the new host. This advantage may compose of components such as comparatively cheaper cost of wages; lower operating costs, lower labour training costs, or less production down time. It may also consist of benefits that are nontransferable such as subsidies or lower taxes. (Dunning, 1988)

Furthermore, lower costs may not be the sole driver for foreign direct investments; there are other drivers such as owner specific advantages and internationalized advantages. (Kvinge, 2008) Owner-specific advantages consist of the possession of products or technology, management and competiveness arises from multi-nationality, and these advantages may be acquired from the home countries’ comparative advantages. (Dunning, 1988) As these specific advantages are not possessed by other competing firms or countries, the firm can exploit its use to generate more p