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hat can affect the host country’s economy will be made by a foreign parent that has no real commitment to the host country, and over which the host country’s government has no real control. Over thirty years ago this concern was expressed by several European countries, who feared that FDI by US MNEs was threatening their national sovereignty. The same concerns are now surfacing in the US with regard to European and Japanese FDI.

 

Home Country Effects: Benefits

 

There are also costs and benefits to the home (or source) country. Does the US economy benefit or lose from investments by having its firms invest in foreign markets? Does the Swedish economy lose or gain from Electrolux’s investment in other nations? Some even go a step further to argue that FDI is not in the interest of the home country and therefore should be restricted. Others also argue that the benefits far outweigh the costs and that any restrictions would be contrary to national interests. For us to understand why people take these positions, it becomes imperative for us to look at the benefits and costs of FDI to the home (source) country.

 

The benefits of FDI to the home country arise from three sources.

 

(1) The current account of the home country’s balance of payments benefits from the inward flow of foreign earnings. Thus, one benefit to Sweden from Electrolux’s investment in other nations which are the earnings that are repatriated to Sweden from those countries. FDI can also improve the current account of the home country’s balance of payments if the foreign subsidiary creates demands for the home country exports of capital equipment; intermidate goods, complementary products, and the like.

 

(2) benefits to the home country from outward FDI arise from employment effects. As with the balance of payments, positive employment effects arise when the foreign subsidiary creates demand for home country exports of capital equipment, intermediate goods, complementary products, and so on. Thus Electrolux’s investment in foreign manufacturing plants can benefit both the Swedish balance of payments position and employment in Sweden, if Electrolux imported some component parts for its foreign plants directly from Sweden. The third point is that benefits arise when the home country MNE learns valuable skills from its exposure to foreign markets that can be transferred back to the home country. Through its exposure to a foreign market, an MNE can learn about superior management techniques and superior product and process technologies. These resources can then be transferred back to the home country’s economic growth rate. For instance, one reason General Motors and Ford invested in Japanese automobile companies (GM owns part of Isuzu, and Ford owns part of Mazda) was to learn about those Japanese companies apparent superior management techniques and production processes. If GM and Ford can transfer this know-how back to US operations, the result may be a net本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。