Book Review: John H. Dunning Multinational Enterprises and the Global Economy

To quote from page xiii: "This volume is intended to accomplish two main objectives. First, it aims to present a fairly detailed, but broadly based, survey of the history and present day role of multinational enterprises (MNEs) in the global economy. Second, the monograph seeks to couch its descriptive and analytical contents within a uniform and consistent conceptual framework." In terms of these goals the book is quite successful.Book review; John H. Dunning; multinational enterprise; global economy

Collateral in Banking Policy and Adverse Selection

This paper presents a theoretical model of lending which emphasizes the role of asymmetric information and total debt service obligations between creditors and debtors. The analytical approach is based upon that of Stiglitz and Weiss (1981); however, emphasis here is placed upon collateral policy aspects of credit contracts as compared to the interest rate policy aspects. It is demonstrated that under certain market constellations, even assuming a completely flexible collateral banking policy, the credit market may be characterized by a disequilibrium situation.asymmetric information; banking; collateral policy

International Cooperation and Intra-Industrial Transactions

The paper examines theoretically the empirical observation or increasing levels of intra-industrial trade flows. The relationship between intra-industrial trade and consumer preferences in addition to product differentiation advanced by internationally active firms are discussed within the framework of a simple model of international trade in differentiated goods. In an international free trade scenario, ranking high in product differentiation and monopolistic market structures, the intensity of international trade activities steadily rises as the structure of consumer preferences exhibits demand pattern similarity: export and import levels rise simultaneously. Intra-industrial commodities exchanges as well as investment cross-hauling of multinational enterprises prove to be important vehicles international cooperation among nation.intra-industrial trade; consumer preferences; product differentiation; international trade; multinational enterprises

The Choice between Greenfield Investment and Cross-border Acquisition: A Real Option Approach

The purpose of this study is to formalize the choice of market entry strategy for an individual multinational enterprise (MNE) from a dynamic perspective. It is argued that incorporating a suitable treatment of irreversibility, uncertainty and flexibility related to a MNEs investment decision gives further insights to the choice of cross-border acquisitions to greenfield investment as the preferred entry mode. In most cases, the initial entry strategy serves as a platform allowing the firm to make subsequent investments to exploit host-country advantages and capabilities.We allowfor this by taking a two-step expansion strategy explicitly into account. The evolutionary process of the value of the foreign direct investment includes two stochastic elements as well as the timing that triggers the transition from export to foreign direct investment. The results suggest that uncertainty and future investment opportunities play an important role when it comes to transit from export to the first phase of the foreign direct investment commitment as well as have an impact on the choice of entry strategy.Foreign direct investment; Multinational enterprise; Sequential investments; Entry mode; Greenfield investment; Cross-border acquisition

Export production under exchange rate uncertainty

Given that a multinational enterprise can react flexibly upon exchange rate movements, international trade flows may be interpreted as an option. An enterprise will opt to export if the profits obtained from exporting under given exchange rate developments are greater than if foreign subsidiary sales were opted. Naturally, given negative exchange rate scenario situations, an enterprise will choose not to export. By virtue of a favorable exchange rate situation it may be more advantageous to implement the flexibility given by the inherent option exercise privilege. Interestingly, even taking account of entrepreneurial risk aversion aspects of enterprises, it is demonstrated that situations characterized by enhanced exchange rate volatility may still lead to greater export trade volumes. --Export,Exchange Rate Volatility,Risk Aversion,Real Option

Book review: direct investments and multinational enterprises: introduction to a foreign trade-theoretic analysis

The book adresses a topic that is of great importance, both from theoretical as well as practical perspectives. Selected theoretical aspects of direct investment and multinational enterprises and their embedding in modern foreign trade theory are the focus of Broll's research. For the Anglo-Saxon countries, one can observe an large interest in foreign trade issues over the last decade. In German-speaking countries, the spread of more recent theoretical insights has not advanced that quickly. Thus, Broll's book fills an important gap on the German market for textbooks.direct investment; multinational enterprise; foreign trade

Employment effects of multinational enterprises

In the course of globalization and occupational crisis, multinational enterprises are increasingly in the spotlight of public interest. Issues as "Who are the big industrial employers in Germany? Where are they doing their business today? Where do they invest nowadays and where will they make their future profits, thus create workplaces? Are the increasing amounts of foreign investment a consequence of very high labour costs. Hence, is it a matter of production relocation at the expense of domestic workplaces? Could the scarce foreign interest in the business location Germany be attributed to the same negative factors?" are at the heart of every recent debate and will therefore be discussed in the present paper.multinational enterprises; employment effects; foreign investment

The role of intra-firm trade

The paper analyses "intra-firm" trade in manufacturing, that is, the estimated one-third of world trade in manufactures which is transacted between affiliated parties. As firms realize the increasing potential for integrating their operations throughout the world, they are contributing to significant shifts in the patterns of international trade and industrial development. As can be seen from the material presented here, a substantial and growing part of international trade is internalized through the MNEs.Multinational Enterprise; trade structure; intra-firm trade

Intra-Firm Trade

The internationalization of production has increased enormously during the last decades. Simultaneously, the rate of intra-firm trade has grown rapidly. Unfortunately, research in the context of intra-firm trade is still very scarce. Although, most economists agree upon the fact that there exist solid economic as well as commercial reasons for intra-firm trade. Transactions between and within firms are the results of complex processes which are motivated by strategic and economic thoughts. The study analyses intra-firm trade, that is the estimated one-third of world trade which is transacted between affiliated parties. As firms realize the increasing potential for integrating their operations throughout the world, they are contributing to signiflcant shifts in the patterns of international trade and industrial development. As emphasized here, international trade is inextricably linked to the growing and substantial share of transactions between affiliated parties conveyed through multinational enterprises.internationalization; intra-firm trade; bilateral monopoly; firm-speciflc assets; intra-industrial trade; multinational enterprises