Lecture Highlights - Roles of MNC Many are financial institutions or owned by powerful people The global ones are mainly high tech companies + impacts on locations, regionally or globally Code of Conduct Principles on how they comply to good governance principles relating to Human Rights Labour Equality Environment Sustainability Anti Corruption Code of Conduct Principles on how they comply to good governance principles relating to Human Rights Labour Equality Environment Sustainability Anti Corruption Key Role is providing FDI, usually via: M & A M & A Equity holding Equity holding Financial Restructuring Financial Restructuring

Why MNCs invest in FDI? Marketing Factors TradeBarriersTradeBarriers Profit Attractions Cost Factors Investment Supporting Country Attractiveness

Host Country Cost-Benefits Host Country Costs Industrial dominance Exploitation of raw materials and cheap labour Bribery and corruption Interference in political matters Technological dependence Disturbance of economic plans Cultural change Interference by home government through MNC Degree of government control may be less than intended Host Country Benefits Improves Gross Domestic Product via repatriation of profits, royalties & fees Increases export opportunities Political advantages Job losses Net effect on imports & exports Creating competitors

Allegations against MNCs 1.Control of technology transfer prices Inappropriate technology introduction to host country 2.Skip the country when regulation sets in 3.MNC control systems exert neo-colonist relationship with host country 4.Expose country sensitive information in global intelligence networks 5.Produce products that do not create or contribute social value to host country 6.Undermining national labour interests 7.Avoid paying taxes 8.Give best jobs to own boys, especially in HQ circles POOR Corporate Social Responsibility Code of Conduct Principles on how they comply to good governance principles relating to Human Rights Labour Equality Environment Sustainability Anti Corruption Code of Conduct Principles on how they comply to good governance principles relating to Human Rights Labour Equality Environment Sustainability Anti Corruption

Lecture Highlights - Trade Theories 1.16th Century Mercantilism theory 2.Absolute Advantage (Adam Smith) 3.Comparative Advantage (David Richardo) 19 th Century onwards 4.Factor Proportions Theory (Heckscher & Ohlin) 5.Country Similarity Theory (Steffan Linder) 6.Global Horizons Theory 7.Product Life Cycle (Vernon) 8.New Trade Theory 9.Ownership Advantage Theory (S.Hymer) 10.Internationalisation Approach (Buckley and Casson) 11.Global Strategic Rivalry theory 12.Porter’s National Competitive Advantage (diamond) theory 13.Internalisation Theory 14.Eclectic Theory (John Dunning)

Individual /Pair Presentation Student Presents

The Rise of Bangladesh’s Textile Trade Case Study Source: The Hindu, Dec 20, 2012The Hindu, Dec 20, Why was the shift to a free trade regime in the textile industry good for Bangladesh? 2.Who benefits when retailers in the US source textiles from low-wage countries suh as Bangladesh? 3.What international trade theory or theories best explain the rise of Bangladesh as a textile exporting powerhouse? 4.How secure is Bangladesh ‘s textile industry from foreign competition? What factors could ultimately lead to a decline? Bangladesh's textile industry – 1.51 m Ethnical Textiles – 3.31m Martin Jacques - When China Rules the World – m

The Benefits During Lecture, we saw the POSITIVES: 1.Capital Formation 2.Technology Transfer 3.Regional & Sectoral Development 4.Internal Competition & Entrepreneurship 5.Favourable Effect on Balance of Payments 6.Increased Employment Bangladesh's textile industry – 1.51 m At What Costs? At Whose Costs?

Bangladesh has the advantage of not being China The argument focus is Cost Advantage China Martin Jacques - When China Rules the World – m The long version – 1.34 hrs BangladeshChina Low cost factorsIs the largest world’s exporter  sunk FDI But still MNC have concerns of increasing cost factors

The Costs During Lecture, we saw the NEGATIVES: 1.Industrial dominance 2.Exploitation of raw materials + cheap labour 3.Bribery and corruption 4.Interference in political matters 5.Technological dependence 6.Disturbance of economic plans 7.Cultural change 8.Interference by home government through MNC 9.Degree of government control may be less than intended 10.Technology transfer may be too expensive or inappropriate (eg old) 11.Can move out when country regulates 12.Products are for overseas markets and may not benefit local social needs or value 13.MNC’s home country’s labour /employment interests are undermined 14.Avoid taxes 15.Best jobs given to MNC’s privileged people Ethnical Textiles – 3.31m