PartOne:EnvironmentalFoundationChapterOne:WorldwideDevelopments1ObjectivesoftheChapterREVIEWcurrenttrendsininternationalinvestmentandtradeEXAMINEthepresenteconomicstatusinthemajorregionsoftheglobalcommunityANALYZEsomeofthemajordevelopmentsandissuesinvariousregionsoftheworld2IntroductionInternationalManagementTheprocessofapplyingmanagementconceptsandtechniquesinamultinationalenvironment3Smallandmedium-sizedbusinessesarebeingaffectedbythetrendtowardinternationalization5IncreasingInternationalizationRegionalDevelopmentsNorthAmericanFreeTradeAgreement(NAFTA)AfreetradeagreementbetweentheU.S.,Canada,andMexicowhichhasinessenceremovedallbarrierstotradeMayexpandtoincludeLatinAmericancountries6EuropeanUnion(EU)Consistsof27(2010)countriesMosttradebarriershavebeenremovedEuroisthecommoncurrencyPacificRimJapanandChinaarethedominanteconomiesAssociationofSoutheastAsianNations(ASEAN)7InternationaltradehasincreasedsubstantiallyoverthelasttwodecadesPercentageofworldtradeaccountedforbythethreemajortradingblocshasremainedfairlyconsistentGroups’shareofimportsandexportsremainsintherangeof55-59percent9--MNCsbuydomesticcompaniesratherthantryingtoexportproductstothatcountry10RECENTTRENDSINFOREIGNDIRECTINVESTMENTINOECDCOUNTRIES..2007-9-9Table1-111Table1-3TopTenCountries/DistrictwithwhichtheU.S.Trades:ForthemonthofJune2007

ThevaluesgivenareforImportsandExportsaddedtogether.

TheseCountries/Districtrepresent66.85%ofU.S.Imports,and64.64%ofU.S.Exportsingoods.Source:.2007-9-913Country/DistrictNameTotalinBillionsofU.S.$YearToDateTotalinBillionsofU.S.$Canada49.49277.07China32.96178.59Mexico29.62167.92Japan17.29103.08FederalRepublicofGermany11.9569.74UnitedKingdom9.2853.65Korea,South7.1441.37France5.9633.91Taiwan5.6830.95Netherlands4.2724.9314Table1-4TopTenCountries/DistrictwithwhichtheU.S.Trades:ForthemonthofJune2010

ThevaluesgivenareforImportsandExportsaddedtogether.

TheseCountries/Districtrepresent66.75%ofU.S.Imports,and62.08%ofU.S.Exportsingoods.Source:.2010-8-1615EconomicStatusandIssuesoftheMajorRegionsNorthAmericaNAFTAhasresultedin:EliminationoftariffsaswellasimportandexportquotasOpeningofgovernmentprocurementmarketstocompaniesinpartnercountries17IncreasedopportunitytomakeinvestmentsinpartnercountriesIncreasedeaseoftravelbetweenpartnercountriesRemovalofrestrictionsonagriculturalproducts,autoparts,andenergygoods18UnitedStatesU.S.MNCshaveholdingsthroughouttheworldForeignMNCsfindU.S.tobealucrativemarket19MexicoEconomicfortuneshavevariedintherecentpastMexicanfirmsexpandingworldwideoperations21EconomicStatusandIssuesoftheMajorRegions(cont.)SouthAmericaCountrieshaveexperienceddifficulteconomicproblems22BrazilAttractedsubstantialforeigninvestmentEconomicfuturestilluncertainChileEconomicsuccessstoryinSouthAmericaFuturestilluncertain23EconomicStatusandIssuesoftheMajorRegions(cont.)EuropePrivatizationoftraditionallynationalizedindustriesEUintendedeliminatealltradebarriersamongmembercountries25EU-basedfirms“planglobally,actlocally”TogainafootholdintheEU,foreignMNCshave:createdacquisitionsandalliancesbegunco-operativeresearchanddevelopmentprograms26RussiaUndergoneeconomicreformManyattemptstostimulatetheeconomyGreaterprivatizationrequiredCriminalactivityincreasing29CzechRepublic,Hungary,andPolandFormercommunistcountriesthathavebecomemostvisibleininternationalarenaSomeformercommunistcountriesarestruggling30EconomicStatusandIssuesoftheMajorRegions(cont.)AsiaJapanEconomicsuccessinthe1970sand1980sattributedto:Culturalvalues31MinistryofInternationalTradeandIndustryGovernmentagencythatidentifiesandranksnationalcommercialpursuitsGuidesthedistributionofnationalresourcestomeetthesegoals32KeiretsusOrganizationalarrangementinwhichalargegroupofverticallyintegratedcompaniesareboundtogetherbycross-ownership,interlockingdirectorates,andsocialtiesprovidegoodsandservices33SevererecessionduringthepasttenyearsTargetforforeigninvestment34Asia

(cont.)ChinaLargereportedannualgrowthinGDPAttractssubstantialforeigninvestmentMNCsfinditdifficulttodobusinessinChina35TheFourTigersSouthKoreaChaebolsLarge,family-heldconglomeratesthathaveconsiderablepoliticalandeconomicpowerHithardestbySoutheastAsiaeconomiccrisis36TheFourTigers(cont.)HongKongHeadquartersforsuccessfulmultinationaloperationsinAsia37SingaporeLeaderandfinancialcenterofSoutheastAsiaOneofthemostcompetitivenationsTaiwanEconomydominatedbytechnologicallysophisticatedindustries38SoutheastAsianCountries‘BabyTigers’lacktheeconomicprowessoftheFourTigers39Table1-5World’sMostCompetitiveNations/District:2000RankUnitedStates 1Singapore 2Finland 3Netherlands 4Switzerland 5Luxembourg 6Ireland 7Germany 8Sweden 9Iceland 10Canada 11Denmark 12Australia 13HongKong 14UnitedKingdom 1540CountryRankings2009-20101.Switzerland9.Canada2.US10.Netherlands3.Singapore11.HongKongSAR4.Sweden12.Taiwan,China5.Denmark13.UnitedKingdom

6.Finland14.Norway7.Germany15.Australia

8.Japan29.China

Source:.2010-8-17Table1-6World’sMostCompetitiveNations/Districts:2009-2010Rank41Characteristicsof