第五章简答题参考答案

1.What factors make it difficult to evaluate whether the overall effects of FDI are sufficiently

positive?

Answer

MNEs may affect countries' balance-of-payments, growth, and employment objectives. Under different scenarios, these effects may be positive or negative for either host or home countries.

a.Home-country gains—Countries want capital inflows because they allow them to increase

their imports. However, because FDI brings both capital inflows and outflows, countries

worry that the balance-of-payments effect may be negative. Unlike balance-of-payments

effects, the effects of MNEs on growth and employment are not necessarily a zero-sum

game among countries. The argument that both the home and the host countries may gain from FDI assumes that resources are not necessarily fully employed and that capital and

technology cannot be easily transferred from use in one industry to another.

b.Home-country losses—The United States is the home country for the largest amounts of

foreign licensing and direct investment. Therefore, its policies understandably invite

criticism. One of its critics is organized labor, which argues that foreign production often

displaces what would otherwise be U.S. production. Critics also cite many examples

of highly advanced technology that has been at least partially developed through

governmental contracts and then transferred abroad. In fact, some MNEs are moving their most advanced technologies abroad and in some cases producing abroad before they do

so in the United States.

c.Host-country gains—Most observers agree that an inflow of investment from MNEs can

initiate greater local development through the employment of unused labor and other

resources. A company will want to move resources such as capital and technology abroad when the potential return is high—especially in an area where they are in short supply.

Most observers also agree that an inflow of investment from MNEs can initiate an

upgrading of resources by educating local personnel to use equipment, technology, and

modern production methods.

d.Host-country losses—Some critics have claimed that there are examples of MNEs

making investments that domestic companies otherwise would have undertaken. The

result may be the displacement of local entrepreneurs and entrepreneurial drive. Or they

may bid up prices by competing with local companies for labor and other resources.

Critics also contend that FDI destroys local entrepreneurial drive, which has an important effect on development. Another argument is that investors learn abroad by observing

foreign companies closely. This may give them earlier access to technology abroad that

they may copy in their home countries. Critics also say that MNEs absorb local capital,

either by borrowing locally or by receiving investment incentives.

2.Explain why the argument that "anything that is legal is ethical" is insufficient.

Answer

a.The law is not appropriate for regulating all business activity because not everything that

is unethical is illegal.