International Business Competing in the global marketplace - Essay Example

Free trade must be encouraged. What this says about targeted trade barriers is that they are restrictive and detrimental to the cause of free trade. Q3) The United States is a net debtor nation and hence the FDI flows into Japan are lesser than the FDI flows into the US from Japan. Moreover, the attractiveness of the US market for its consumption patterns and its sheer size make for businesses from all over the world to invest in the US. The implications of this trend would be that more and more businesses in the US would be owned by Japanese and may not be good for the US economy in the long term. Q4) I would recommend setting up a wholly owned subsidiary in Europe as this would lead to a case where my firm can make use of the local subsidies and also leverage on the fact that the technical competence available with my firm makes it possible to manufacture the computers at half the cost.

As for the other options, exporting directly from the US may involve paying tariffs and duties. And licensing to a European firm means that my firm has to share the know how with them. Q1) This is a classic question about whether free trade is beneficial or domestic market driven economies are good. My opinion is that we should go by the theory of comparative advantage and thus let firms invest abroad and complete the cycle of investments from those countries flowing back home and creating jobs.

Thus, the cyclic view of trade and inflows and outflows must be taken into account while making a decision regarding investing abroad or domestically. Q2) Any multilateral trading agreement would benefit the world economy in the longer term. What one country is good at and what another is good at and hence barter or exchange has been the underpinning of the world economy and thus free trade and multilateral trade agreements benefit everyone in the longer run. As for