Globalisation, Transnationals and Economic Policy - Essay Example

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Globalisation, Transnationals and Economic Policy

Foreign direct investment has been very very important to the economic development in Central and Eastern Europe over the last decade. Basically, importance is marked by successful resource seeking there. Also, Market seeking is another important economic development in Central and Eastern Europe. Lastly, Efficiency seeking has improved the economic situation in Central and Eastern Europe.Basically, importance is marked by successful resource seeking there. Some parent companies invests large capital resource in order to to acquire major factors of production that are more efficient than if the factors are obtained in its home country base. In fact, these scarce resources may not even be available in the home economy at all. These major factors include cheap labor and natural and resources. This exemplifies why Foreign Direct Investors set up shop into developing countries like the Asian third world countries. Specifically, some parent companies would go out of its way to seek cheap and hard to find natural resources in the Middle East and Africa. Other foreign direct investment companies prefer to set up manufacturing plants in in Southeast Asia and Eastern Europe because of the cheap labor costs there.This will increase the purchasing power of the workers in Eastern Europe. As a result This will decrease the unemployment rate in Eastern Europe and Southeast Asia.Also, Market seeking is another important economic development in Central and Eastern Europe. ...Show more

Summary

This essay investigates to what extent has foreign direct investment been important to the economic development of countries in Central and Eastern Europe over the last decade. The writer will reveal some pieces of advice to a government on an appropriate policy towards FDI.

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