Monopolistic Advantage Theory 11 11 2012

html head style typetext/css html, body font-family Open Sans, Arial font-size 11pt line-height 16pt @page size auto margin 25mm 25mm 25mm 25mm span.tab width 2em height 10px display inline-block h1 font-weight 400 padding 0px margin 0 0 30px 0 h4 font-weight 400 font-style italic padding 0 0 15px 0 margin 0 0 30px 0 border-bottom 1px solid black /style /head meta http-equivContent-Type contenttext/html charsetutf-8 body h1Monopolistic Advantage Theory/h1 h4By blackwhirlwind Studymode.com/h4 Monopolistic Advantage Theorybr / span classtab/spanan approach in international business which explains why a particular national firm is able to compete with indigenous competitors in overseas market. He started by looking at international investments which classified into two portfolio investment and direct investment. Control is the key factor which differentiates one another. If the investor directly controls the foreign enterprise, his investment is called a direct investment. If he does not control it, his investment is a portfolio investment. Basis theory of portfolio investment is the theory of capital movement across nations mentioned that the main determinant of movement of funds across frontiers is interest rates. However, in terms of international production (FDI), therersquore some criticisms about this theory 1.span classtab/spanFDI does not necessarily involve movement of funds from the home to host country (some firms are also borrowing abroad). 2.span classtab/spanFDI often takes place both ways both countries involved are investors and host to FDI 3.span classtab/spanIf the main determinant of FDI is interest rate differentials between countries, FDI is expected to exist in a particular country with various industries. However, FDI tends to concentrated on particular industries across various countries Hymer also specified that FDI