Assignment: International Trade and Foreign Direct Investment (100 marks total; 10%)

Turn in Assignment 3 at the end of Lesson 9.

Introduction

In Lessons 3 to 9, you explored a variety of factors influencing international business operations, many of which are on a national scale or most relevant to larger, established corporations. Now it is time to examine the relevance of international trade barriers and treaties as they relate to those factors and the proposed international business for your two countries.

You will also consider whether your product or service would benefit from a foreign direct investment strategy and whether there are any Canadian government trade programs that might help you.

Note

This assignment contributes to the continuing development of your Final Project.

InstructionsPart A: Economic Systems (20 marks)

Prepare a 2-3-page report (500-750 words, double-spaced) containing the following:

1. Characterize the economies of the two target countries that you selected in Assignment 2. Are they centrally planned, mixed, or free market economies? Explain your decision.
2. Using World Bank and or IMF data, make a 3 × 4 table to compare your two countries with Canada for four factors of economic development: GDP (per capita), GNP, PPP, and HDI. Make sure to cite your sources.

Hint

Find the information you need on the World Bank, UNDP, or IMF websites, or search for it on Wikipedia or Google Public Data.

1. Based on the information you have gathered, which of your two countries looks like a better place to do business? Why?

Part B: Trade Barriers and Treaties (40 marks)

Prepare a 3-4-page report (750-1,000 words, double-spaced) containing the following:

1. What was the mercantile system and why did it fail?
2. Compare absolute advantage with comparative advantage. How does the size of a country and the diversity of its economy impact on these theories?
3. How does one determine the suitability of a country for trade using Michael Porter's Diamond?
4. Apply Porter's Diamond to an analysis of your product or service industry for one of the countries you selected in Assignment 2. Your diamond analysis should be in point form and include descriptions of the following:
   • Factor conditions
   • Demand conditions
   • Related and supporting industries
   • Firm strategy, structure, and rivalry
5. Summarize with a paragraph to summarize the interactions among these diamond factors and any evidence of the role of government in your selected country.

Part C: Government Interference and Foreign Direct Investment (20 marks)

Prepare a 2-3-page report (500-750 words, double-spaced) containing the following:

1. What are the political, economic and cultural motives for governments to interfere with international trade?
2. What methods might the governments of the countries you selected in Assignment 2 use to increase or restrict international trade?
3. To what extent do you think your product or service might attract government attention?
4. What is the difference between foreign direct investment and portfolio investment?
5. Would FDI be appropriate for your product or service in the two finalist countries you selected in Assignment 2? Explain.

Part D: Canadian Government Business Assistance (20 marks)

Prepare a 1-2-page report (250-500 words, double-spaced) containing the following:

1. Identify potential sources of financing and start-up support or assistance that may be appropriate for your international business.
2. List government sources of financial or other assistance for Canadian businesses establishing operations in foreign markets. These sources should be appropriate to your particular product/service.
3. Briefly explain why these government programs or agency programs and services are or are not a good fit with your needs.
4. A partial list of sources is contained in Appendix B: Suggested Format/Outline for Final Project Report. Note that government programs will vary with time, so make sure you verify that your program information is current.