Feminism: Gender dynamics play a pivotal role in

International Business and Trade international politics, often overshadowed by

Reviewer traditional views of politics. Spotlights gender dynamics
in international relations. The feminist approach to IR
Topic 1 – International Trade and Relations challenges the male-centric nature of global governance
and institutions.
International Trade: The purchase and sale of goods
and services by companies in different countries that Neorealism (Structural Realism): Within an anarchic
enables them to expand their markets and gain access system, the international structure drives states to
to commodities and services that might otherwise be prioritize security. Considers the impact of the
not readily available domestically international system's structure on state behavior. A
theory of international relations that emphasizes the
International Relations Theories: International trade role of power politics in international relations, sees
theories provide explanations for the exchange of goods competition and conflict as enduring features
and services between countries. They are categorized
into two main groups: classical or country-based trade Neoliberalism (Institutionalism): This theory champions
theories and modern or firm-based trade theories. the role of international institutions in fostering
cooperation, despite an inherent global anarchy. English
These theories provide insights into interactions among School: Shared values and norms guide international
states and global non-state actors, explaining actions. Underlines the role of institutions, and the
motivations behind their behaviors. They include: English School prioritizes shared values. A theory of
international relations that holds that international
Realism: In an anarchic world, states prioritize self- cooperation between states is feasible and sustainable
interest with power and security being paramount.
Which asserts that states pursue self-interest and English School: accepts the realist premise that the
power. Set of related theories of international relations state is the primary reality of the international political
that emphasizes the role of the state, national interest, system and maintains that these imperatives forswear
and power in world politics. the replacement of the society of states by a universal
community of mankind. Emphasizes the shaping role of
Liberalism: Emphasizes the importance of cooperation discourse and language in defining global realities.
and international institutions in achieving global peace.
Constructivism: Behaviors on the international stage are Post-colonialism: Sheds light on colonialism's long-
molded by shared ideas, norms and cultural identities. lasting impacts and the biases of a Eurocentric
Which emphasizes cooperation and the role of perspective in international relations. Post-colonial IR
institutions. A political philosophy that prioritizes compares global colonial power dynamics to critique
individuals and individual rights as the highest and relies the subjectivity of the cultural and ideological 'Other' of
on citizen consent for the legitimacy of government International Relations, which is embodied by the
power and political leadership. portrayal of colonized countries and their people as
subordinate to European nations. Examines the effects
Constructivism: Focuses on shared ideas and norms. of colonialism
Focuses on how ideas, norms, values, and identities are
created and constructed, how they develop, and how Poststructuralism: focuses on the role of discourse in
they change the way states comprehend and react to international relations. The state is completely central
their situation. in IR. However, in contrast with realism, which takes the
state as fixed and timeless, poststructuralism
Marxism and Critical Theory: Economic class struggles 'deconstructs' the primary role of the state in
and capitalist interests shape global politics. Highlights
economic class struggles.
international politics as well as in the realm of the suggests that intra-industry trade takes place between
International relations. the countries with similar levels of development.

Theories of International Trade: These theories explain Product Life Cycle Theory: As products mature,
the mechanisms behind cross-border exchanges of production often migrates to countries with cost
goods and services. advantages. Where production location changes with
product maturity. Is usually broken down into four
Classical (Country-Based) Theories: stages; introduction, growth, maturity, and decline.
Mercantilism: Countries strive to amass wealth by
enhancing exports and curtailing imports, with gold and Global Strategic Rivalry Theory: Global competition is
silver being traditional wealth symbols. Which seeks to shaped by barriers to entry and multinational firms'
boost exports and reduce imports. Was based on the strategies. Focuses on how multinational companies
idea that a nation's wealth and power were best served seek competitive advantages. Focused on multinational
by increasing exports and reducing imports. companies and their strategies and efforts to gain a
comparative advantage over other similar global firms
Absolute Advantage: Countries should focus on in their industry.
producing goods that they can manufacture efficiently.
Which encourages efficient goods production. Refers to Porter's National Competitive Advantage Theory: A
the benefit of manufacturing a thing or product while nation's industrial strength lies in its ability to innovate,
utilizing a lower quantity of the necessary input determined by resources, demand, suppliers, and
resources. company attributes. Suggests that national
competitiveness depends on innovation. -describes the
Comparative Advantage: Countries should produce competitive advantage that nations or groups possess
goods in which they have a relative efficiency, based on factors available to them.
irrespective of absolute metrics. Suggests specialization
in relatively efficient goods. An economy's ability to Concerns Regarding International Trade:
produce a particular good or service at a lower Job Losses: Global competition might lead to job losses
opportunity cost than its trading partners. in vulnerable sectors. The involuntary removal of paid
employment from an individual
Heckscher-Ohlin Theory: Exports are driven by the
abundance and cost-effectiveness of local resources. Worker Exploitation: Firms might relocate to regions
Links exports to abundant resources. A country having with cheaper labor, leading to potential exploitation.
capital in abundance will produce goods that are National Sovereignty: Trade agreements can potentially
capital-intensive, and a country having abundant labor infringe upon a country's legislative freedom.
will produce labor-intensive goods
Trade Deficits: Constant trade imbalances can be
Leontief Paradox: Unexpected patterns of trade, like detrimental to economies. Refers to an imbalance and
the U.S. importing capital-heavy goods while exporting often abuse of power between the employer and the
labor-intensive ones. Examines unexpected trade employed.
patterns. Is that a country with a higher capital per
worker has a lower capital/labor ratio in exports than in Cultural Erosion: Local cultures risk being
imports. overshadowed by dominant foreign influences. Loss of
unique cultural practices, beliefs, and traditions over
Modern (Firm-Based) Theories: time.
Country Similarity Theory: Countries at similar
development levels engage in intra- industry trade due Environmental Concerns: Firms might be drawn to
to aligned consumer preferences. Involving intra- countries with lenient environmental norms. The
industry trade between similar nations. This theory probability and consequence of an unwanted accident.
Infant Industry Argument: Emerging industries in Import Quotas: Volume restrictions on certain imports.
developing nations might need shielding from Voluntary Export Restraints (VER): Export limitations
established foreign rivals. New industries in developing usually set by exporting nations, often upon importing
countries need protection against competitive pressures countries' requests.
until they mature.
International trade volume refers to the total quantity
Economic Security: Heavy reliance on global markets or value of goods and services traded internationally,
makes nations susceptible to external economic encompassing, both exports and imports, Growth in
perturbations. The ability of individuals, households and international trade relates to the rate at which this
communities to meet their basic and essential needs volume expands over time. The total amount or value of
sustainably and vulnerability to external shocks. products and services traded. It includes both a
country's exports and imports.
Unfair Competition: Industries supported by
governments can offer prices that undercut
competitors. Conducted by a market participant that
gains or seeks to gain advantage over its rivals due to
state backing.

Intellectual Property Concerns: Insufficient protections

in certain nations might lead to intellectual property
violations. Weak IP protection exists in partner
countries, and intellectual property rights have
economic value when put into use in the marketplace.

Understanding Trade Volumes and Barriers:

International Trade Volume: Represents the aggregate
value or quantity of globally traded goods and services.
Growth in International Trade: Indicates the rate of
expansion of international trade over a timeframe.

Barriers to Trade:
Tariffs: Import taxes paid by domestic consumers,
affecting the price of imported items.

Quotas: Restrict the quantities of certain imports.

Embargoes: Total prohibitions on trade.

Standards: Guidelines ensuring imports adhere to

health, safety, or ethical norms.

Subsidies: Financial support to domestic sectors by

governments.

Non-Tariff Barriers:
Licenses: Permits granted by governments to import
specific goods.
Topic 2 – Foreign Direct Investment other forms of debt denominated in terms of a
Foreign Direct Investment (FDI) occurs when a firm foreign country's national currency, whereas
invests directly in production or other facilities in a FDI is the investment in real or physical assets,
foreign country over which it has effective control. An such as factories and distribution facilities.
investment made by a firm or an individual in one Direct investment is seen as a long-term
country into commercial interests situated in another investment in the country's economy, while
country is known as a foreign direct investment (FDI). A portfolio investment can be viewed as a short-
key factor in economic growth is FDI. is an ownership term move to make money. Each has its own
stake in a foreign company or project made by an advantages and disadvantages, and the best
investor, company, or government from another choice for a particular company will depend on
country. Foreign direct investment (FDI) is when an its specific circumstances.
investor becomes a significant or lasting investor in a
business or corporation in a foreign country, which can Types of FDI
be a boost to the global economy 1. Horizontal FDI - the company engages in the same
activities but in a different country. Occurs when a
Two Main Types of FDI: company initiates a similar operation or business model
in another country. Business expands its domestic
1. Flow of FDI- the amount of FDI undertaken over
operations to a foreign country. In this case, the
a given time period (e.g., a year). monetary
business conducts the same activities but in a foreign
transactions that were made within the
country.
reference period
2. Vertical FDI -a company may do various activities
Types of Flow of FDI:
abroad, but these activities must still be tied to the
a. Outflow of FDI - the flow of FDI out of a main business. A business acquires a complementary
country, that is, firms undertaking direct business in another country. A business expands into a
investment in foreign countries. The value foreign country by moving to a different level of the
of outward direct investment made by the supply chain
residents of the reporting economy to
3. Conglomerate FDI -a company acquires an unrelated
external economies.
business from another country. A company invests in a
b. Inflow of FDI- the flow of FDI into a country,
foreign business that is unrelated to its core business.
that is, foreign firms undertaking direct
investment in the host country. The value of 4. Platform FDI - business expands into a foreign
inward direct investment made by non- country but the output from the foreign operations is
resident investors in the reporting exported to a third country. Also referred to as export-
economy. platform FDI, a business expands into a foreign country
2. Stock of FDI-the total accumulated value of but the output from the foreign operations is exported
foreign-owned assets at a given time (which to a third country.
takes into account possible direct investment
along the way). Are the total amount of direct Entry Mode - the strategy a company uses to enter a
investment that has been made over time as of foreign market and establish its presence.
a certain date.
a. International Franchising - allows stand-out
Foreign Direct Investment (FDI) VS. Portfolio companies to enter new territories by using their brand
Investment and intellectual property.
- Foreign portfolio investment is the investment
b. Contractual Alliances - is a framework for an alliance
in financial assets comprising stocks, bonds, and
or a collaboration agreement between two or more
parties where no separate, jointly owned, corporate
entity is created

c. Equity Joint Venture - is an agreement between two

or more entities stating that they will enter into a The Impact of FDI on the Host Country
separate but joint business venture together. Ideal, 1. Job shift to the host country is one of the benefits of
most doable FDI to that country.
2. MNEs are powerful competitors to local businesses.
d. Wholly Foreign Owned Subsidiaries - is a company
whose common stock is 100% owned by another - FDI allows the transfer of technology-particularly in
company. the form of new varieties of capital inputs that cannot
be achieved through financial investments or trade in
Strategic Logic of FDI goods and services FDI can also promote competition in
1. Resource Seeking FDI - attempts to acquire particular the domestic input market. Recipients of FDI often gain
resources at a lower real cost than could be obtained in employee training in the course of operating the new
the home country. businesses, which contributes to human capital
development in the host country. Profuse penetrated
2. Market Seeking FDI - attempts to secure market by FDI contribute to corporate tax revenues in the host
share and sales growth in the target foreign market. country

3. Efficiency-seeking FDI - attempts to rationalize the - Negative Impact of FDI on Host Country Suppress
structure of established resource-based or marketing- Domestic Enterprises and Product, No 'Workers Safety
seeking investment. Net', Increase in income Inequality, Creation of
monopoly power, Pollution Haven Hypothesis,
4. Strategic Asset-seeking FDI - acquire the assets of
Undermining National Sovereignty, and Adverse Effect
foreign firms so as to promote their long- term strategic
on Balance of Payments
objectives.
How the MNE Benefits from Foreign Direct Investment Current Theories on FDI
1. Enhancing efficiency from location advantages 1. Product Life-Cycle Theory - is a dynamic theory that
2. Improving performance from structural discrepancies explains changes in the trade position of a nation in the
3. Increasing return from ownership advantages long run
4. Ensuring growth from organizational learning
5. FDI can foster and maintain economic growth, in both 2. Monopolistic Advantage Theory - is that firms
the recipient country and the country making the operating in foreign countries have to compete with
investment. domestic firms that are in an advantageous situation in
6. Developing countries have encouraged FDI as a terms of consumer preference, language, culture, legal
means of financing the construction of new systems and no foreign exchange risk.
infrastructure and the creation of jobs for their local
workers. 3. Internalization Theory - is known as internalization
7. Multinational companies benefit from FDI as a means because the authors stressed this point with regard to
of expanding their footprints into international markets. the creation of Multinational Corporations.
Multinational enterprises (MNEs) benefit from Foreign
4. The Eclectic Paradigm - is an economic and business
Direct Investment (EDI) in several ways: Economic
method for analyzing the attractiveness of making a
development stimulation. Easy international trade.
foreign direct investment. The eclectic paradigm model
Employment and economic boost. Tax incentive,
follows the OLI framework.
Development of resources, Resource transfer. Reduced
sis. Increased productivity, Increase in a country's
income
- Stage theory approach/ The Network Model, Linkage,
Leverage and Learning, Strategic Alliance Network
Approach, Leapfrogging Theory

New Perspective on FDI

1. The dynamic capability perspective - this perspective
argues that ownership-specific resources or knowledge
are necessary but insufficient for the success of
international investment and production.

2. The evolutionary perspective - the evolutionary

perspective of FDI views international investment as an
ongoing, evolutionary process shaped by an MNE's
international experience, organizational capabilities,
strategic objectives, and environmental dynamics.

3. Global integration and local responsiveness - the

framework suggests that participants in global
industries develop competitive postures in two
dimensions. The first dimension, global integration,
refers to the coordination of activities across countries
in an attempt to build efficient operations networks and
maximize the advantage of similarities across locations
and second, local responsiveness, concerns response to
specific host country needs

- Direct investment is a crucial component of the

comprehensive strategy employed by major
corporations to facilitate global production and sales.
The notable rise in substantial two- way direct
investment flows indicates that American companies no
longer possess exclusive control over the distinctive
competitive advantages necessary for accomplishing
prosperous global expansion.
Topic 3 - Multinational Enterprise (MNEs) & other international trade and investment and have
International firms significantly shaped the modern global economy.
- Rooted far back 15th and 16th centuries in
MULTINATIONAL ENTERPRISE (MNE) - Firm that has Western Europe, specifically in the nations of
directly invested abroad and has at least one working England and Holland, during a period known as
mercantilism.
affiliate in foreign country over which it maintains
- MNE known today appears during 19th century,
effective control. A multinational enterprise abbreviated new entities provided a new level of inter- firm
as MNE and sometimes also called multinational connection, a wider division of labor, and a
corporation (MNC), just multinational or International higher level of product integration across
Corporation, is an enterprise producing goods or - First MNEs were established in 1920s. Many
delivering services in more than one country. Also called more came up in the 1950s and 1960s as US
multinational corporation (MNC). An enterprise businesses expanded worldwide and Western
Europe and Japan also recovered to become
producing goods or delivering services in more than one
powerful industrial economies. Currently, most
country. Its management headquarters in one (or rarely of the biggest companies in the world are
more than one) country, the home country, while also multinationals.
operating in other countries, the host countries.
The Image of MNE
Types of Multinational Corporations Models of MNE

1. A Decentralized corporation 1. Centralized

2. A Centralized Global Corporation 2. Regional
3. International Division within a corporation 3. Multinational
4. A Transnational corporation - The companies which have taken a complete
advantage of trade, liberalization, caused under
Degree of Internationalization GATT.WTO are MNC's or MNE's Examples: Sony,
Philips, Coca Cola, Pepsi, Procter and Gamble,
1. Foreign assets as to total assets.
etc. are some of the famous and images of
2. Foreign employment as to total employment
MNEs. These companies combine their
3. Foreign sales as to total sales
resources and objectives to achieve profit in
- It is frequently used in academic research,
global market. According to the world
business analysis, and strategic planning
investment report 1997, there were about
because it aids in evaluating a company's
44,500 MNE's in the world with nearly 2.77
engagement and global reach.
lakhs foreign collaborations. Hence MNE's is an
important factor including Globalization.
History of MNE
- MNES can be traced to the Phoenician,
Benefits of being Multinational Enterprise
Carthaginian, Greek, and Roman empires
- Date back to Assyria around 2000 B.C.
1. Improving efficiency
- The story of globalization, economic/change, and
shifting business paradigms in the history of 2. Gain competitive advantage
multinational enterprises (MNHS) is fascinating, 3. Opportunities for advancement
MNEs are businesses that have operations in 4. Specialized products
several different nations as well as subsidiaries or
affiliates that operate internationally. The history of MNE from developing countries
MNEs reflects the dynamic nature of international Advantage of MNE
trade, which is shaped by alterations in the 1. Provides an inflow of capital
economy, politics, and technology. These 2. Allows countries to purchase imports
businesses continue to be major players in
3. Improves the local infrastructure
 4. Provides employment - More advanced economies, Better-developed
- MNCs are believed to be highly beneficial for Infrastructure, Mature capital markets, higher
developing countries in terms of bringing standards of living and high household incomes,
employment opportunities and new more reliable accounting and financial
technologies that spillover to domestic firms. reporting. Less risk of sudden political or
Furthermore, MNCs often benefit from economic instability, Domestically, less risks
government subsidies, which could in future be associated with direct foreign currency
linked to investment in local firms - Multinationals provide an inflow of capital into
the developing country which helps economy
Disadvantage of MNE develop and increase its productive capacity.
Moreover, it also provides employment and
1. Creates higher environmental costs
may improve the skills of their workforce.
2. Imports skilled labor
Additionally, they may help improve
3. Supports “sweatshop” labor
infrastructure in the economy by stimulating
4. Creates one-way raw material resource
the spending in infrastructure such as roads and
consumption
transport. Lastly, this firms help to diversify the
MNE from the Developing Economies And Its Features economy away from relying on primary
products and agriculture which are often
- DC MNEs typically invest less in R&D and have subject to volatile prices and supply.
weaker ownership assets than 'conventional'
MNE Internationalization tends to rely more on Typical Features of DMNE
leveraging country-specific advantages and 1. Exploit firm
organizational innovations than firm-specific 2. Obtain low-cost production bases
ownership assets. 3. Focus on Other Developing Markets
- The institutional environment in the home 4. Governance
countries of DC MNEs influences their 5. Bargaining Power
organization and governance. Home 6. Overcome tariff and non-tariff barriers to exports
governments support the internationalization of 7. Escape stringent environmental limitations
domestic firms in order to strengthen the home 8. Reliance on Third Parties
economy's international competitiveness. Long- 9. Industry Domain
term linkages and networks characterize the 10. Strategy
relationships between firms. DC MNEs often
- Strong economic growth, High per capita income,
rely on networks with ethnic, linguistic or
Liquid equity and debt markets, Accessibility by foreign
cultural affinities that tend to be relatively
investors/Openness to foreign ownership, Dependable
closed and built on personalized governance
regulatory system. Ease of Capital Movement, Efficient
and control system.
Market Institutions
DMNE Advantage in Global markets
Small and medium-sized enterprises (SME) - play an
Home Government Support – enjoy the backing of their essential role in the process of job creation. SMEs, or
home government to an extent that they may small and medium-sized enterprises, are defined
compensate for ownership and location disadvantages differently around the world. The country a company
operates in provides the specifics on the defined size of
Flexibility – the lower the production scale of DMNEs an SME.
permits flexibility
- Businesses that maintain revenues, assets, or a
number of employees below a certain
 threshold. Each country has its own definition - The internationalization of small and Medium-sized
of what constitutes a small and midsize Enterprises (SMEs) involves several distinctive features
enterprise. Certain size criteria must be met, and strategies tailored to the unique characteristics of
and occasionally, the industry in which the smaller businesses
company operates is taken into account as well.

Obstacle to SME Internalization

1. Access to capital
2. Less skilled employees
3. Lack of knowledge
4. Competition from larger firms
5. Lack of Managerial experience

- Internal barriers, informational barriers, human

resource barriers, financial barriers, product and price
barriers, distribution, logistics and promotion barriers.

- The key barriers to internationalization of SME include

inadequate and/or untrained human resources, lack of
working capital to fund exports, and information
constraints in locating and analyzing export markets.

SME Advantages in Internationalization

1. Innovativeness
2. Creativity
3. Entrepreneurial spirit
4. Lower overhead cost
5. The ability to "leapfrog" technologically
6. Flexibility in adaptation SME
7. Larger and new niche markets
8. Ways of spreading risks lowering and sharing costs,
including R&D costs
9. Possibilities to exploit scale and technological
advantages
10. Improved access to finance
11. Upgrading of technological capability

- Internationalization refers to the process of designing

and developing products, services or businesses in a
way that allows them to be easily adapted to specific
local markets around the world.

SME Internationalization Features

1. Push Factors
2. Pull Factors
3. Management Factors
4. Chance Factors