Trade strategy
Trade strategy
Different countries have very different trade strategies. Investments by MNEs
in industrial countries typically are established to service local markets, which
also tend to be relatively free to exports and imports. Developing countries,
however, often have adopted specific, strategies to encourage exports or
impede imports. MNE management must understand a country's attitude to-
ward trade, since it may affect the type of investment undertaken. Countries
such as Korea, Hong Kong, and Singapore have developed policies that en-
courage firms to produce for the export market. Other countries, such as Ar-
gentina and the Philippines, have established trade barriers and incentives to
favor production for the domestic market.
Explanations for why firms trade and why governments intervene in
trade are discussed in Chapters 4 and 5. There are some interesting facts on
rnacroeconomic performance of countries grouped by their trade orientation.
Countries that are strongly export oriented tend to have a higher average
percentage growth in real GDP, a higher average percentage growth in per
capita GNP, a larger percentage of gross domestic savings relative to GDP, and
a larger percentage growth in manufactured exports than do other countries.
They also tend to exhibit lower rates of inflation.
Different countries have very different trade strategies. Investments by MNEs
in industrial countries typically are established to service local markets, which
also tend to be relatively free to exports and imports. Developing countries,
however, often have adopted specific, strategies to encourage exports or
impede imports. MNE management must understand a country's attitude to-
ward trade, since it may affect the type of investment undertaken. Countries
such as Korea, Hong Kong, and Singapore have developed policies that en-
courage firms to produce for the export market. Other countries, such as Ar-
gentina and the Philippines, have established trade barriers and incentives to
favor production for the domestic market.
Explanations for why firms trade and why governments intervene in
trade are discussed in Chapters 4 and 5. There are some interesting facts on
rnacroeconomic performance of countries grouped by their trade orientation.
Countries that are strongly export oriented tend to have a higher average
percentage growth in real GDP, a higher average percentage growth in per
capita GNP, a larger percentage of gross domestic savings relative to GDP, and
a larger percentage growth in manufactured exports than do other countries.
They also tend to exhibit lower rates of inflation.
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