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					      Global Linkages

          Management Linkages


Country     Policy Linkages     Country
  A                               B


     Trade and Investment Linkages
      Global Linkages
          Management Linkages



Country       Integration
                                Country
  A                               B


     Trade and Investment Linkages
Regionalization of Economic Activity
 Levels    of Economic Integration
  –   Free Trade Area
  –   Customs Union
  –   Common Market
  –   Economic Union
 Effectson trade and FDI patterns
 Evolution toward worldwide integration
 Impact on management of MNCs
Trade and Investment in Isolation
Prevailing Tariff Levels and Investment Patterns
 FDI              20%

Trade



        10%        33%

        40%
                        100%
                 Free Trade Area
                               Consequences
                                  External Tariffs?
 No tariffs             20%      Trade Creation?
  among                           Trade Diversion?
  members                         Regional content?
 Tariffs with                    Export jobs?
  non-members            33%
  unchanged

                           100%
    Trade and Investment in
           Isolation




             33%

      40%
Cheapest
Producer
   Trade Creation from FTA
          Formation




            33%



Cheapest
Producer
Trade and Investment in
       Isolation


               Cheapest
               Producer

         33%

40%
Trade Diversion from FTA
       Formation


               Cheapest
               Producer

         33%
                    Customs Union

 FTA plus...
                            33%
 Common tariff
  policy for non-
  members
                            33%


                              33%
                   Common Market
                    No Non-Tariff Barriers
 Customs
  Union plus...
 Reduction of
  non-tariff
  barriers among
  members


                   Shift in International Strategy
         EC Single European Act
 Free   Movement of Goods
  – Abolish border controls
  – Reduce state subsidies to industries
  – Mutual recognition of technical standards
 Free   Movement of Services
  – Mutual recognition of regulatory standards
  – Increase competition for public procurement
  – Harmonize regulation in telecom and
    transportation industries
         EC Single European Act
 Free   Movement of Capital
  –   Abolish exchange controls
  –   Allow cross border securities trading
  –   Cross border banking
  –   Initiation of ECU denominated financial instruments
 Free   Movement of Labor
  – Abolish border checks
  – Mutual recognition of skills, education
  – Common immigration policy
             Common Market
                         National Currencies
Consequences
                                      ÖS
• Strain on F/X rates
• …tax rates?
                                               £
• …growth?
• …trade?               DM



                                 FF        DkK
               Economic Union

 Common Market
  plus...
 Single currency
 Harmonization of
  Monetary and
  Fiscal Policies
     Multilateralism in Trade and
     Investment Regimes: WTO


                                Pacific
                                 Rim
Europe



                                North
                                America
    Regionalization/Triad: Building
      Block or Stumbling Block?


                                Pacific
                                 Rim
European
 Union


                                NAFTA
Impact of Integration on MNCs
       Management Linkages ?



 Country      Integration
                                Country
   A                              B


      Trade and Investment Linkages
Impact of Integration on MNCs
 Shift   in Globalization Drivers
  – Market drivers
  – Cost drivers
  – Competition drivers
 Entry   Mode Decisions
  – Regional stand-alone attractiveness
  – Regional strategic importance
 International   Strategy
  – Location and integration of value-creating
    activities

				
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posted:12/3/2011
language:English
pages:19