Theories of Internationalisation and Relevance in Explaining Global Essay

Theories of Internationalisation and Relevance in Explaining Global Patterns of Foreign condition Investment - Essay ExampleIn effect, countries can gain profits if they direct their activities to the generation of products and serve which argon most profitable. This surmise relates the situation where a country creates products and services for its people, and for export in terms of surplus. As a result, it is favourable for countries to bit the products and services where they also have an stinting disadvantage (Morgan and Katsikeas, 1997). The economic advantage and disadvantage may be base on differences in available resources, labour, and technology. The classical theory argues that the foundation of international trade would come from the differences in the qualities of production and available resources which are also based on differences in natural and acquired advantages (Morgan and Katsikeas, 1997). A nonher theory of internationalisation contrasts with the classical trade theory. The factor parity theory discusses that countries usually produce the export products and services which support significant production advantages that they have, and they will import the products and services which would need large scores of production factors that may be limited (Hecksher and Ohlin, 1933). This theory supports the desire of economic advantage by evaluating the endowment and costs related to factors of production (Morgan and Katsikeas, 1997). The supra theories do not completely explain the latest trends in international trade. For one, the rise of technological development and of multinational corporations during the sixties called for new theories on international trade. At such time, the product life cycle theory relating to international trade was considered a significant basis in explaining trade patterns and MNC expansions (Morgan and Katsikeas, 1997). Such theory... This essay stresses that financial merchandise is also another opportunit y for securing strategic flexibility for FDIs. MNCs can circumvent the restrictions imposed by the host government, mostly those which relate to finance, remittance, and foreign exchange in order to secure and support their new and advanced products. Another opportunity relates to the transfer of information. Flexibility ensures that MNEs can benefit from the act of singling out available opportunities, assessing the orb markets to match the involved buyers and sellers and avoiding the barriers to effective trade relations. This paper makes a conclusion that based on the above discussion, the theories of internationalisation like the classical trade theory acknowledges the fact that trade relations and investments are located by the needs of investors and of the consumers. Where the need is great and the profit would best be gained, the FDIs would likely be made. The current global trends in investments indicate how the emerging economies have manifested the greatest need and th e most profit for investments, for which discernment investors have directed their economic activities to these areas. The internationalisation theory generally indicates how the current trends in the economy are gravitating towards more open forms of trade and economic relations. These FDIs are but another manifestation of internationalisation, and these investments would likely produce bigger avenues for investment in the years to come.