Introduction to the impact of the multinational Prime Minister Brian Mulroney was elected in late 1984 and soon thereafter replaced the agency formed by the eleven-year-old Foreign Investment Review Act (FIRA) with a new agency called Investment Canada. Whereas the FIRA’s purpose had been to limit foreign control of the Canadian economy, Investment Canada’s...
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ECONOMIC IMPACT OF THE MNE Balance-of-Payments Effects Place in the Economic System Of international economic relationships few topics elicit as much discussion as the balance-of-payments effect of trade and investment transactions.5 Discussion itself often leads to incentives, prohibitions, and other types of governmental interference as countries try to regulate the capital flows that parallel...
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Growth and Employment Effects Unlike balance of payments, the growth and employment effects of MNEs are not necessarily a zero-sum game among countries. Early economists assumed production factors were at full employment; consequently, a movement OI anY °f these factors abroad would result in an increase in output abroad and a decrease at home....
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POLITICAL AND LEGAL IMPACT OF THE MNE Because of the size of many MNEs, there is much concern that they will undermine through political means the sovereignty of nation-states. The foremost concern is that the MNE will be used as a foreign policy instrument of its home government.15 Since the home countries for nearly...
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Extraterritoriality When governments extend the application of their laws to the foreign operations of companies, the term used to describe the situation is extraterritoriality. Host countries generally abhor these situations, since they weaken the host country’s sovereignty over local business practices. Companies likewise fear situations in which the home and foreign laws conflict, since...
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