1. Outline for 10/24: International Investment/Foreign Direct Investment (FDI)
Basic Terms
Trends in FDI
Why do firms expand their production abroad?
Why do governments let foreign MNCs into their national economies?
Why do governments let production leave their national economies?
International regulation of FDI (or lack thereof)

2. Basic Terms
Multinational Corporation (MNC)
Foreign Direct Investment
Intra-firm trade
Vertical vs. horizontal integration

3. Trends in FDI
Increasing number of firms doing FDI
Rise in quantity of FDI
FDI tends to be North-North
Although some growth in North-South FDI

6. What are the risks of moving production facilities abroad?
If risky, then why do it?

7. Why do firms expand their production abroad?
Overcome existing barriers to trade
explains N-N FDI
horizontal integration
2. Access to natural resources
explains N-S FDI
vertical integration
3. Access to cheaper labor

8. What are some FDI alternatives?
FDI to overcome existing barriers to trade
2. FDI to access to natural resources
3. FDI for access to cheaper labor

9. Why do governments let foreign MNCs into their national economies?
Jobs
Capital
Human Capital
What are some reasons why governments may not let foreign MNCs into their national economies?

10. Why do governments let production leave their national economies?
Capitalist Ideology
MNC capture of governments
Tax revenue
More politically feasible than certain alternatives: immigration

11. International Regulation of FDI
ITO
1962 UN Resolution on Permanent Sovereignty over Natural Resources
Do you know of any international treaties or organizations that regulate MNC behavior?