COMPULSORY QUESTION: THE ECONOMIC RISK ANALYSIS OF A DEVELOPING COUNTRY
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Module
INTERNATIONAL BUSINESS MANAGEMENT
Institution
INTERNATIONAL BUSINESS MANAGEMENT
Part I:
CURRENT ACCOUNT DEFICIT – CAD
Question: how great is the short-term trade burden?
Answer: compare the current account deficit (CAD) and the gross domestic product (GDP)
“Country X has a CAD/GDP rate of Y%, which is considered a high/low rate compared to the b...
COMPULSORY QUESTION: THE ECONOMIC RISK ANALYSIS OF A
DEVELOPING COUNTRY.
Part I:
CURRENT ACCOUNT DEFICIT – CAD
Question: how great is the short-term trade burden?
Answer: compare the current account deficit (CAD) and the gross domestic product (GDP)
“Country X has a CAD/GDP rate of Y%, which is considered a high/low rate compared
to the benchmark for an emerging economy, associated with a high/low risk and
requiring a high/low rate of return.”
GDP
“Country X has GDP growth rate of Y%, which is considered a
booming/sustainable/low/recessionary rate compared with the benchmark for an
emerging economy, associated with a high/medium/low risk and requiring a
high/medium/low rate of return.”
INFLATION
“Country X has an inflation rate of Y%, which is considered a
, high/stable/low/deflationary rate compared to the benchmark for an emerging
economy, associated with a high/medium/low risk and requiring a high/medium/low
rate of return.”
Part II: THE MOST RELEVANT DATE FOR FDI INVESTMENT TO A FOREIGN
COUNTRY
1. G – GDP per capita growth rate (the trend). May indicate a growing productivity,
higher spending.
2. L - Life expectancy. Gives you an idea of the general well being of the population and
the degree to which the government is looking after everyone
3. I – Inflation (GDP deflator): is the trend steady or out of control? Indicates the
economic competency of the government
4. F – FDI, measure of how well the country is attracting foreign investors, particularly
the trend
5. T – Technology
6. S – School
1.1) A. How do the multinational corporation benefit from the principles of the
comparative advantage theory of international trade?
Comparative advantage is defined as one country's ability to produce a good or
service more efficiently and inexpensively than another.
International trade has benefited for multinational corporation by encouraging more
trade among nations, more open financial institutions, the efficient flow of
information over the Internet enables business to share knowledge about products,
production processes and pricing in real time lead to improve economic output and
opportunities for multinational corporation included the cost of labor, cost of capital,
natural resources, geographic location, and workforce productivity.
In a globalized economy together with international trade, transportation networks
between countries and businesses have enabled the cost-effective shipment of goods
across the world. Thus, corporations have shifted manufacturing and other labor-
intensive operations to these countries to take advantage of lower labor costs.
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