• Globalization of production - shift from concentration to diffusion • Production moves from developed (e.g. US, EU, Japan) to developing states (e.g. China, India) • Internet – a game changer? FDI trends
• Global FDI flows jumped 36% in 2015 to an
estimated US$1.7 trillion, their highest level since the global economic and financial crisis of 2008-2009 • A surge in FDI targeting developed economies (+90%) was the principal factor behind the global rebound (in US, FDI increased 4x) • Growth was largely due to cross-border merger and acquisitions (M&As) FDI trends
• Developing economies saw their FDI reaching
a new high of US$741 billion, 5% higher than in 2014 • Developing Asia, with its FDI flows surpassing $0.5T, remained the largest FDI recipient region in the world, accounting for 1/3 of global FDI flows FDI trends • Flows to transition economies continued to fall (-54%) as tumbling international commodities prices & regional conflicts undercut FDI. Investment in the region’s 2 largest host economies, Russia and Kazakhstan, fell sharply • Poorest developing economies are less dependent on natural resources in terms of FDI attraction • Private equity firms less involved in FDI flows Other notable trends
• FDI by Sovereign Wealth Funds remains small;
SOE TNCs are heavily involved in FDI • Intl production continues its steady growth; • TNCs from developing and transition economies expanded their overseas operations faster than their developed country counterparts China outbound M&A • Geely bought Swedish carmaker Volvo (2010 for $1.5B) and London Taxi Company (2012) • Dongfeng Motors bought 13% of French carmaker PSA Peugeot-Citroen (2014) • Lenovo acquired IBM (2004 for $1.75B) • China Investment Corp bought 9.9% of Morgan Stanley ($5.579B) • China National Chemical bought Swiss agrochemical company Syngenta (2016 for China automobile sector
• JV with foreign companies to produce cars in
China • China benefit from employment and get access to technology so their cos can produce their own • Why cant foreign car cos say no? China is the biggest auto market in the world ! JVs
• Guangzhou Automobile Industry Group (GAIC) -
w/Peugeot to produce Peugeot 504 (later defunct); in 1990s, w/ Honda to produce Accord and Fit; in 2006, with Toyota to make Camry; Guangdong is now the center for manufacturing Japanese car makes in China • Tianjin Automotive Industry - w/ Daihatsu to produce Charade (merged with FAW/Toyota JV later) JVs
• Shanghai Automotive Industry
Corporation(SAIC) - Volkswagen: Volkswagen Santana mid-size/compact car • First Automobile Works - Volkswagen: Volkswagen Jetta compact car • Dongfeng Motor Corporation - Citroën: Citroën Fukang compact car • Beijing Automotive Industry - Hyundai Motor - DaimlerChrysler: Jeep Cherokee (XJ) 3 Perspectives on International trade • Liberalism – trade is good guided by “invisible hands”; each state can benefit from law of comparative advantage; states should limit trade protection and let market (efficiency) forces run global economy • Mercantilism – trade may have harmful effects that has to be mitigated; hence, protectionism is needed for infant industries and to achieve national econ independence and security; state has a duty to protect its society and businesses from adverse effects of intl trade 3 Perspectives on International trade • Structuralism – trade is a tool of imperialism (e.g. colonies provide resources and serve as markets); intl division of labor between core, periphery and semiperiphery with highest value given to core states Evolution in intl trade
• Postwar GATT emphasizing reciprocity and
nondiscrimination • Mercantilism on the rebound (1960s-70s); under pressure, states reduced trade barriers but find ways to support their exports and limit imports thru strategic trade policies, NTBs, protectionism • Uruguay Round and establishment of WTO (1990s to present) – curb protectionism and resolve trade disputes Some important intl trade terms
• Import quotas – limit on goods that can be
imported (there is also an export quota!) • Export subsidies – measure to effectively reduce price of export product to make them more attractive/competitive • Currency devaluation – attempt to decrease price of exports and increase price of imports • NTBs – covers a wide range of measures from govt health & safety standards, local content, licensing and labelling requirements Some important intl trade terms
• Strategic trade practice – efforts to create
comparative advantage by providing subsidies e.g. R&D to reduce learning curve; often associated with industrial policies which are active state intervention to promote certain patterns of industrial devt • Dumping – unfair trade practice of selling products abroad at less cost than at home • Countervailing trade practice – defensive measure vs protectionism e.g. anti-dumping law, countervailing tariffs or quotas North-South trade issues • In 1973, G77, a coalition of developing nations in UN, demanded greater access for their primary goods to protected N markets • In 1980s, S incurred huge debt from N & intl lending institutions; “Washington Consensus” required that they grow their way out of debt by instituting reforms – liberalize their trade policies and open doors for FDI; want to loan? Then follow SAP conditionalities • Instead of reforming intl econ, financial system, N prescribed/imposed their notion of devt & devt path to S • BRICS NDB and AIIB as win-win alternatives to N- dominated intl economic order
G.R. No. 152356 - San Miguel Corporation v. Mandaue Packing Products Plants-San Packaging Products - San Miguel Corporation Monthlies Rank and File Union