Quiz 4

Name: Carlos Yaque

Date: 10/25/22

1. What are the main drivers of foreign direct investment flows? Give examples.

The main drivers of foreign direct investment flows tend to be Globalization and Merges and
Acquisitions.

2. Please make a small case scenario of a fictitious company and cover for that
company the cost of production following the structure shown in the book (pages
208 and 209)

Structure of fictitious company:

 EU Parliament = Board of Directors

o These people are in charge of all major decisions in the company and
serve as the “top government” of the company, it includes people like the
CEO and major members.
 Council of the EU = Department heads
o This could be something like meetings on specific departments withing a
company, such as the finance department meetings or PR/Advertisement
department
 European Commission = Board of Directors/Innovation Staff
o This could be people in charge of drafting or deciding things to further
improve the company with new ideas, products, or other things.
 Court of Justice = HR department
o This could be HR who make decisions on hiring and firing depending on
“crimes” or violations of contractual obligations in a company.

3. Please briefly explain what policy instruments can host and home countries use to
promote FDI?

Host countries can do one of 2 things, they can use “Financial Incentives” to incentivize foreign
direct investment or infrastructure improvements. Home countries can offer, insurance, loans, tax
breaks or apply political pressure on other nations to lessen restrictions for instance.

4. Do you think that it would be beneficial for North American countries (Canada,
USA and Mexico) to establish a “North American Economic Union” similar to the
actual European Union??? Name some advantages and disadvantages that you
foresee would be given. 
I think it would be a good idea, it would help promote inter-continental trade and not have to rely
so much on products from so far away. It would also help unify the continent and create a system
of trade networks to improve all nations involved. The only issue is a country like Mexico for
instance would have a hard time with this, as there is so much corruption and illegal trade going
on already, it would all have to come to an end before this took place.