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International Business Policies Archives - Page 3 of 5 - MBA Knowledge Base

The Potential Impact of Multilateral Framework on Investments (MFIs)

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.  … Read the rest

Reasons for the Increased Foreign Direct Investments

The factors that propel sustained economic development have not changed with  time. They include the generation and efficient allocation of capital and  labor,  application of technology and the creation of skills and institutions. These fact  determine how well each economy uses its endowments and adds to them. They  also affect how flexibly and dynamically each country responds to changing  economic conditions. However, the global context for development has changed  enormous the past decades. These changes affect not only the role of Foreign Direct Investment (FDI) in host countries, but also government policies on FDI. The following three are  of particular significance.… Read the rest

Effect of Portfolio Capital Flows in an Economy

The notion that one can make inferences about the characteristics of financial  flows by just observing their label is not new in economic. There is much  convention wisdom that show capital flows reflect speculative, unstable  behavior  while flows reflect evaluations of long run profitability and are based  on fundamental economic condition. The flows of funds approach used by many  central banks and others for a analysis of the domestic economy developments is  based on labels which are deemed meaningful.

This view has also been an important part of the traditional analysis of  international finance for many years. In fact, the structure of balance of  payments accounts  reflects an implicit theory that different types of capital  flows have different economic implications.… Read the rest

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.
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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.… Read the rest

Global Company Competitiveness Analysis

A domestic company may extend its products to foreign markets by exporting, licensing and franchising. Initially, the exporting is indirect. It may develop a more serious attitude towards foreign business and move to the next stage of development. International company is normally the second stage in the development of a company towards transnational corporation. The orientation of the company is basically ethnocentric and the marketing strategy is extension. The marketing mix developed for the home market is extended into the foreign markets when a company decides to respond to market differences, it involves into the stage there multinational that pursues a multidomestic strategy.… Read the rest