International economics--multinationalization of the firm,outsourcing Essay

multinational economics--multinationalization of the firm,outsourcing and intra industry trade on factor price equalization - Essay Example(Markusen and Venables) Over the historic period there has always been a conflict on defining these corporations in one way. One of the definitions tell Multinational enterprise as An enterprise that engages in Foreign Direct Investment (FDI) and owns or controls harbor adding activities in more than one rural area(Dunning and Lundan) The phenomenon of Globalization has affected the Multinationalization of firms a lot. Now that the products, services, and customers are not limited to one region, the companies are attracted to expand their operations globally in order to gain otiose profits.The term outsourcing is relatively new compared to other literature of economics. Few decades ago, organizations believed to do everything by themselves. It was all area of value chain. However in the late 80s the concept of outsourcing came into the mark et. Which was to outsource one break away of the business to a third party.(Quinn) this step was considered necessary either to save costs or to spring the overall operations more efficient. It was also viewed as a tool which could help an organization focalization on the core business. (Feenstra and Hanson) Basic concept of outsourcing is to desexualise a contract with another organization or supplier to become part of the value chain by providing a product/service to make operations of the organizations more effective and efficient.Intra industry trade is an interesting concept, which means trade of goods and service of a comparable kind. In simple words it can be defined as exchange of similar products for import and export. The term is usually used in international trade and means when a country export and imports similar products and services at the same time. (Grubel and Lloyd) The concept is very interesting because according to scholars an accounting cant be found for the idea. It is hard to say why countries export and import equivalent commodities. (Grimwade) Some researchers recommend that such trade is carried out