International Economics
In Multinational Enterprise and Economic Analysis, R.E. Caves analyzes the world of international relationships and how these relationships and business shape each other. Modern businesses stand in the middle between following government policies and developing those policies. The same can be said for public perception. The effective business reacts to and shapes public perception. This becomes more important when looking at multinational businesses. Perceptions, policies, and regulations around the world all intertwine effecting businesses. Those who have a presence in more than one environment can draw on that experience to take maximum advantage of their power.Multinational enterprises are joining together to transform the latter part of the twentieth century into a trade and business network such as has never existed at any other time in history. Factors such as the Asia-Pacific Economic Cooperation forum (APEC) and the North American Free Trade Agreement (NAFTA) have joined the world together in way that it has never been joined before. Caves points out that these factors and the transformations occurring are the result of a strategic effort by multinational enterprises to shape governmental policy
With the effective use of technology, almost any enterprise can become "multinational". Caves stresses that multinational enterprises use communication and technology to shape policies and perceptions as a means to an end, not as an end in itself. Part of their effectiveness lies in their ability to communicate and to sway opinion. He specifies that technology transfer takes place when the consumers in developing countries have access to the goods and services that embody the technology. One tremendously important factor in the multinational business world is technology. Business has shaped even international agreements as weighty as the North American Free Trade Agreement. It is that consumption which keeps the country on the cutting edge and allows it to stay abreast of wealthier and more influential countries. This agreement was orchestrated largely though the strategic actions of multinational enterprises. By reducing or limiting trade barriers, this agreement has bolstered business activity between the United States and Latin American countries. Judgment is now passed on a business's ability to influence society itself. Domestic production of technology-intensive goods and services in developing countries is not as important at the ultimate consumption of technologically intensive goods and services within a country. Caves notes, however, that technology transfer is an almost osmotic type of relationship. In certain geographic areas these countries are adopting each others characteristics. In today's economic environment communication is critical in allowing a business to deal with the restructuring of national and international economies, in preventing market saturation, and in allowing a business to deal with their competitors more effectively.
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