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Globalisation, Transnationals and Economic Policy - Essay Example

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This essay investigates to what extent has foreign direct investment been important to the economic development of countries in Central and Eastern Europe over the last decade. The writer will reveal some pieces of advice to a government on an appropriate policy towards FDI…
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Globalisation, Transnationals and Economic Policy
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Download file to see previous pages Foreign direct investment has been very very important to the economic development in Central and Eastern Europe over the last decade. Basically, importance is marked by successful resource seeking there. Also, Market seeking is another important economic development in Central and Eastern Europe. Lastly, Efficiency seeking has improved the economic situation in Central and Eastern Europe.
Basically, importance is marked by successful resource seeking there. Some parent companies invests large capital resource in order to to acquire major factors of production that are more efficient than if the factors are obtained in its home country base. In fact, these scarce resources may not even be available in the home economy at all. These major factors include cheap labor and natural and resources. This exemplifies why Foreign Direct Investors set up shop into developing countries like the Asian third world countries. Specifically, some parent companies would go out of its way to seek cheap and hard to find natural resources in the Middle East and Africa. Other foreign direct investment companies prefer to set up manufacturing plants in in Southeast Asia and Eastern Europe because of the cheap labor costs there.
This will increase the purchasing power of the workers in Eastern Europe. As a result
This will decrease the unemployment rate in Eastern Europe and Southeast Asia.
Also, Market seeking is another important economic development in Central and Eastern Europe....
As a result
This will decrease the unemployment rate in Eastern Europe and Southeast Asia.
Also, Market seeking is another important economic development in Central and Eastern Europe. Some foreign direct investment companies would daringly venture in uncharted waters as they set up shop in Central and Eastern Europe. The companies main aim is to increase its market territory. Expectedly, this marketing strategy of expansion will increase total world-wide sales thereby increasing profits. Reasonably, the parent companies only want to protect or their current sales figures. Hopefully, some parent companies just want to infiltrate the markets of its competitors while protecting its markets in its home country base. Some parent companies enter this type of international marketing strategy through mergers and acquisitions.
Lastly, Efficiency seeking has improved the economic situation in Central and Eastern Europe. Clearly, some foreign direct investors venture into Central and Eastern Europe in order to exploit the economies of scale and the scope there. The market in Central and Eastern Europe can be segregated into the rich, the average and the poor customer prospects. It is even suggested that this type of Foreign Direct Investment can be realized after either resource or market seeking investments have been cropped up. Then, this will in all probability will increase the sales as well as the profitability of the firm. Typically, this is the type of Foreign Direct Investments that is mostly widely practiced in highly developed economies. This is what is actually happening within closely integrated markets like Central and Eastern Europe.
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