(Markusen and Venables) Over the years there has always been a conflict on defining these corporations in one way. One of the definitions declared Multinational enterprise as “An enterprise that engages in Foreign Direct Investment (FDI) and owns or controls value adding activities in more than one country”(Dunning and Lundan) The phenomenon of Globalization has affected the Multinationalization of firms a lot. Now that the products, services, and customers are not limited to one region, the companies are attracted to expand their operations globally in order to gain extra profits.
The term outsourcing is relatively new compared to other literature of economics. Few decades ago, organizations believed to do everything by themselves. It was all part of value chain. However in the late 80’s the concept of outsourcing came into the market. Which was to outsource one part of the business to a third party.(Quinn) this step was considered necessary either to save costs or to make the overall operations more efficient. It was also viewed as a tool which could help an organization focus on the core business. (Feenstra and Hanson) Basic concept of outsourcing is to make a contract with another organization or supplier to become part of the value chain by providing a product/service to make operations of the organizations more effective and efficient.
Intra industry trade is an interesting concept, which means trade of goods and service of a similar kind. In simple words it can be defined as exchange of similar products for import and export. The term is usually used in international trade and means when a country export and imports similar products and services at the same time. (Grubel and Lloyd) The concept is very interesting because according to scholars an explanation can’t be found for the idea. It is hard to say why countries export and import identical commodities. (Grimwade) Some researchers recommend that such trade is carried out ...
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(International Economics--Multinationalization of the Firm,outsourcing Essay)
“International Economics--Multinationalization of the Firm,outsourcing Essay”, n.d. https://studentshare.net/miscellaneous/394952-international-economics-multinationalization-of-the-firmoutsourcing-and-intra-industry-trade-on-factor-price-equalization.
According to the theory, nations felt the need of engaging in trade with each other so that they could offset their differences in natural endowments. Identifying capital and labor as the main factors of production, this theory stated that countries were endowed with various amount of these factors of production and these endowments naturally differed between countries.
Since then, the subject of economic development and international trade has been highlighted in the world media following the period of intense globalization. Economists believe that the impact of the international trade on the economic development of the developing nations depends on the level of the liberalization policies followed by the concerned nations.
According to the paper international trade is a major factor for macroeconomic stability for a nation. With increasing globalisation in the 21st century, international trade has turned complex with large-scale transactions worth billion dollars taking place annually. Within the realms of international trade, inter-industry trade is referred to trade in products belonging to divergent industries.
In this terms of trade US would be able to get a unit of banana for less than 4 unit of machines and Equador would be able to get 2 units of machines in exchange for 1 unit of banana. Both countries benefit through free trade.
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International trade plays a vital role in the sustenance of globalization phenomenon and growth of individual country’s political, cultural and social structure. It involves exchange of goods, services and capital among different countries. It has a significant impact on the share of gross domestic product of any country.
This research will begin with the statement that currently there are increasing instances of international trade taking place between industrialized nations, especially in the field of product manufacture. With increasing globalization in the 21st century, international trade has turned complex with large-scale transactions worth billion dollars taking place annually.
This does not necessarily mean that countries import only what they cannot produce; import and export of goods in the same industry occur. Increasing use of containers to transport the goods has seen intra-industry trade intensifies to satisfy the growing consumer preference
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