Friday, May 9, 2014

Including Investment and Labor Movement in Global Management Assessments

In today’s world, international business is a mainstay of everyday commerce and policy.  Products move across the globe and make their way into homes and lives of individuals and families at different places on the planet. Most statistics include the hard goods and services that traverse across borders but may be missing other tangible value. Dr. Predrag Bjelić discusses the inclusion of direct foreign investment and labor flow as important components of economic calculations. 

Even though 2006 IMF data indicated that 75% of international trade is measured in goods the liberalization of trade has also brought with it services, investment and human capital. The latter two being something more difficult to concretely assess but should be included in the overall assessment. Understanding the flow of information along with the intellectual capital encourages a greater conception of global commerce and the antecedents to that commerce.

Foreign Direct Investment (FDI) is an important method of pushing up the employment economy. FDI can be defined as “an investment involving a long-term relationship and reflecting a lasting interest and control by a resident entity in one economy (investor or parent enterprise) in an enterprise resident in an economy other than that of the investor (FDI enterprise or affiliate enterprise or foreign affiliate)”(UNCTAD 2007, 245). 

In the past, emerging markets grew from turning investment income into productive output sold on the global market. To be effective in this growth, human capital will also need to develop adequately to use that investment capital to its maximum growth potential. Countries that have excess labor skill inadvertently lose some of that labor skill to countries that provide employment opportunities. 

The author determines that multi-national companies have changed traditional calculations of international commerce. In many cases large firms provide direct foreign investment and emerging economies export skilled labor in a type of loose exchange. New calculations should take into account the flow of investment and the movement of labor across the borders to get a better perspective of global exchange.

UNCTAD. 2007. World Investment Report 2007:Transnational Corporations, Extractive Industries and Development. Geneva.

Bjelic, P. (2013). New approach in international trade analysis due to international factor movements. Zbornik Radova Ekonomskog Fakulteta u Istocnom Sarajevu, 7

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