Author Question: Explain how export-oriented method of economic growth can demonstrate the importance of global ... (Read 69 times)

laurencescou · **on:** Jul 14, 2018

Explain how export-oriented method of economic growth can demonstrate the importance of global interactions.

What will be an ideal response?

Question 2

Explain offshore profit shifting and the United States' stance on the practice.

What will be an ideal response?

Jsherida · **Reply #1 on:** Jul 14, 2018

Answer to Question 1

Answer: Countries that adopt an export-oriented method of foreign investment to build factories that will manufacture goods for international markets. In that way, they can achieve economies of scale immediately. Export-oriented policies rely on global capital markets to facilitate international investment, and they rely on global marketing networks to distribute the products. Export-led development is usually accompanied by low tariffs and export duties, market-based domestic economic policies, privatization of most economic activity, and general laissez-faire openness to economic innovation. The countries that have grown the fastest in recent decades have generally followed export-oriented programs. The success of these policies demonstrates again how, increasingly, what happens at places is the result of what happens among places.

Answer to Question 2

Answer: Multinational corporations challenge individual nations to regulate them or to tax them through offshore profit shifting, whereby a transnational company has sister companies in different countries to take advantage of different laws and accounting rules. Trade among different divisions of individual corporations today accounts for an estimated one-third of all international trade, and the corporations avoid any country's taxes by allocating investment and profits wherever they wish. By 2007, 28 of all U.S. multinationals' trade in goods occurred among arms of the same companies. The U.S. government takes the position that any company that employs and trains U.S. workers and that adds value in the United States is a U.S. corporation, no matter which flag it flies at its international headquarters or where those headquarters are.