StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Impact of Multinational on the Financial Markets - Article Example

Cite this document
Summary
This article discusses multinational which make quite a substantial impact on the financial markets. To understand this impact, we are going to look at it from the basic economic point of view. When many multinationals carry out FDI, the impact is quite bigger and hits the financial markets harder…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95% of users find it useful
Impact of Multinational on the Financial Markets
Read Text Preview

Extract of sample "Impact of Multinational on the Financial Markets"

In simple words, multinational make quite a substantial impact on the financial markets. To understand this impact, we are going to look at it from the basic economic point of view. When a multinational undertakes FDI, it usually does that in the host country's currency. This increases the demand of host country's currency and hence the host country's currency appreciates at the expense of the multinational's local currency. When many multinationals carry out FDI, the impact is quite bigger and hits the financial markets harder.

According to the global index of world's largest cities (2008), the impact of FDI is quite significant in the economic growth of the country and in turn this is reflected in the lifestyle of people. FDI brings money to the financial markets of the developing countries, which is reflected in terms of easy availability of credit, infrastructure development and more government expenditure in to the economy. All of this results in creation of metropolis and triggers further economic growth. According to Osland (2003), the impact of FDI on foreign financial markets is reflected in terms of more technology transfer between the countries.

For example, USA loaned money to Pakistan in 1999 with a condition that this money will only be used for exporting USA goods, and Pakistan bought F19 aircraft. Hence, we can see that any money that is transferred to another country is used for the benefit for the same country or its industrial sector. This leads to growth of the local industry and profits made by multinationals are usually sent to the parent companies, increasing overall profitability of the firm and increased inflow of foreign exchange.

However, it is believed that this sudden growth of financial markets through FDI brings disadvantages to a country as well. FDI usually sets up intense competition for the local industry and hence many a times local industry suffers a lot. For example, China uses the policy of dumping goods into foreign markets, which has resulted in closure of several small businesses all over the world. This leads in unemployment and the closure of local industry means that all the money will flow out of the company to parent company and little will be left for further investment.

(Shrader et al, 2000).

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Impact of Multinational on the Financial Markets Article”, n.d.)
Impact of Multinational on the Financial Markets Article. Retrieved from https://studentshare.org/finance-accounting/1526353-international-financial-markets-essay
(Impact of Multinational on the Financial Markets Article)
Impact of Multinational on the Financial Markets Article. https://studentshare.org/finance-accounting/1526353-international-financial-markets-essay.
“Impact of Multinational on the Financial Markets Article”, n.d. https://studentshare.org/finance-accounting/1526353-international-financial-markets-essay.
  • Cited: 0 times

CHECK THESE SAMPLES OF Impact of Multinational on the Financial Markets

Globalization of World Financial Markets

Research finding proving the detrimental effect οf liberalization on the financial system.... In the paper “Globalization of world financial markets” the author analyzes benefits and detrimental consequences οf financial liberalizations.... This result has been confirmed in a 1999 study by Marco Rossi (IMF working paper WP/99/66) for a sample that includes developing countriesAccording to Wyplosz study, liberalization οf financial markets may be desirable in the long term, but it is risky in the short to medium term, and developing countries should approach this as a delicate step calling for cautious policy reactions, according to a research study for the Group οf 24 on International Monetary Affairs, the developing country grouping at the IMF and the World Bank....
9 Pages (2250 words) Essay

The Effects That Multinational Companies Can Have on a Host Country

One effect that multinational companies have on a host country is the economic and financial benefits that are gained by the host country.... In many cases the bargaining power of the host country helps these countries in securing major financial benefits.... While the global village has seen… The effects are based on a number of variables that play an important part in the direction and future of the investments of these The many economic benefits to host countries have prompted many countries around the world, including developed and developing countries to focusing on attracting multinational companies or foreign direct investments as they are also called....
7 Pages (1750 words) Essay

Industrial Relations in Asia-Pacific Region

The present research paper "Industrial Relations in Asia-Pacific Region" tried to analyze the impact of multinational firms on these markets of China and Indonesia.... However, these firms generate positive as well as negative impacts over the local labor markets, through wage, export and productivity spillover effects.... These responses can affect the local labor markets positively or adversely.... Flexible labor markets accompanied by low welfare costs are the primary symbols of economic growth in a nation....
12 Pages (3000 words) Research Paper

Globalization and Its Effects on Multinational Companies

hellip; Globalization is defined as the integration of markets, such as commodity markets, product markets, insurance markets, credit and money markets, and financial markets in the global economy.... In addition, globalization has also been stimulated by the increasing mobility of capital across countries that enables firms to relocate and invest overseas and repatriate their profits, while the development of derivatives and other complex financial products have enabled the rapid growth of global credit markets....
6 Pages (1500 words) Term Paper

Review of Multinational Cost of Capital

This has also altered the functions of financial systems and the instruments that are used for depicting the financial structure of the company (Modigliani and Miller, 1958).... This research paper aims at highlighting the different aspects of multinational cost of capital by emphasising on the opinions of different authors.... The multinational companies have the ability to raise capital for its operation from different capital markets around the world, despite its domestic opportunity....
8 Pages (2000 words) Essay

Research and Development in the Multinational Enterprise

hellip; Globalization and internalization have opened avenues for marketers to reach various markets.... It has opened various new markets and operation centers worldwide.... lobal heterogeneity can be on cultural, environmental, social, technological, financial, legal, and political.... The paper covers the multinational Enterprise in the first section.... Any multinational enterprise faces heterogeneity at various levels of its operations from customer development to Research and development....
8 Pages (2000 words) Term Paper

Impact of Globalization of World Financial Markets

Research findings proving the detrimental effect οf liberalization on the financial system.... This paper "Impact of Globalization of World financial markets" discusses whether financial liberalization is good or bad we need to analyze arguments given by both opponents and proponents οf financial liberalization.... According to Wyplosz study, liberalization οf financial markets may be desirable in the long term, but it is risky in the short to medium term, and developing countries should approach this as a delicate step calling for cautious policy reactions, according to a research study for the Group οf 24 on International Monetary Affairs, the developing country grouping at the IMF and the World Bank....
8 Pages (2000 words) Essay

The Effects of Multinational Companies on a Country's Economy

The author of this essay describes the effects of multinational companies on a country's economy, This paper outlines the implications for development, structure, factor intensity of technology, location, resource extraction patterns of multinational corporations, crucial impacts on the economy.... nbsp; So, first, we discuss the reasons for the existence of multinational firms and thereon attempt to interpret the implications of such motivations for the process of development....
8 Pages (2000 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us