IBSR Topic 14 International Economic Flows Cross-Border Flows exports (goods) investments (money) Firm A Firm B State X State Y
IBSR Topic 15 International Economic Integration Business Links:ownership contract Firm A agent B State X State Y branch/office subsidiary A-1 Licensee/ Franchisee B Supplier B
IBSR Topic 16 Nature of Links Legal Form ownership: of assets (branch) of shares (subsidiary) contractual (long-term: not one-off sale) agency supply licence/franchise Management Rights control direct power to command managers instruct scope of authority quality obligations quality obligations & targets
IBSR Topic 17 Transnational Corporations (TNCs) Trans-or Multinational? Bi-national? Control activities in more than 1 country Single Integrated Firm Joint Venture Public (with host government) Private (with other firm) ownership of assets (branch) ownership of subsidiary (shares) long-term contracts supply agency licence/franchise
IBSR Topic 18 TNCs and Economic Flows Foreign Direct Investment (FDI) portfolio investor lends to someone else for income direct investor controls activity International flows and Internal Transfers goods (Unctad WIR 1999, 233): 75% of world exports are by TNCs 35% of world exports are intra-firm transfers between affiliates investments: stock / flow include Equity investment – may capitalise inputs, e.g. know-how reinvested earnings (20% of FDI flows WIR 1999:4) Intra-firm loans – raised on international financial markets
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