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Economics of Multi-national Enterprise
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Overview of the UK Inward FDI Flows
Statistics published by UNCTAD over the last one decade indicate that the Inward FDI flows into the UK took a rising trend between 2003 and 2007, but it has taken a downward trend since 2008 (Driffield et al., 2013, p. 8). In 2003, the value of inward FDI flow was $27.39 billion (Driffield et al., 2013, p. 8). The amount increased sharply over the next few years to a record high of $200.039 billion in 2007. However, the recent global financial crisis that peaked in 2008 led to a sharp drop in the amount of inward FDI flows. The total value reduced from the peak in 2007 to $89.026 billion in 2008 (Driffield et al., 2013, p. 8). Since then, the value of inward FDI flows has been declining gradually, although there was a slight increase in 2011. In 2013, the value of FDI inflows was $37.1001 billion. The decline has been influenced by both internal factors in the UK and recent trends in the global economy. Table 1 in the appendix presents the trend in the inward FDI flows into the UK from 2003 to 2013 (Driffield et al., 2013, p. 8).
Sources of the UK’s Inward FDI
The manufacturing sector has been the largest source of FDI in the UK over the last one decade. It is imperative to note that there are more than 45,000 affiliates of foreign companies operating in the UK. Most of these affiliates invest in research and development. In fact, these organizations account for an average of 42 percent of the UK’s expenditure in research and development annually. Most of the subsidiaries investing in research and development are owned by UK multinational organizations (Lancheros& Temouri, 2013, p. 12). The research and development has been focusing on the manufacturing sector. They have played a significant role in the development of the UK’s optical products, precision equipments, automobile products and information communication technology (ICT) products. The outcomes of the research and development activities are also applied in other sectors. For instance, the outcome of research and development has contributed to the recent inventions of advanced ICT products that are widely applied by organizations in almost all the other sectors, including the banking, manufacturing, aerospace, government, and health sectors (Lancheros& Temouri, 2013, p. 13).
The services sector has also been a significant source of FDI in the UK, although its contribution has been lower than the contribution of the manufacturing sector. The foreign firms operating in the UK service sector mainly offer financial services. Although there was a decline of inward FDI flows into the service sector in the UK in 2008, there was improvement in 2009. There was a decline in performance of the sector in 2010, followed by a slight rise in 2011. However, there has been gradual decline during the succeeding years (Lancheros& Temouri, 2013, p. 13). Most of the foreign investors in the UK service sector are from Germany, France, Luxembourg, US, Spain and Belgium. The decline in the inward investments into the service sector in the UK as mainly been caused by disinvestments by German and French investors. The improvement in the performance of the inward investment into the sector in 2011 was caused by an increase in the number of investments from the US. Overall, most of the foreign companies operating in the UK manufacturing and services sectors are from the US. A good number of them are from the other EU countries and Japan. A very small proportion of these companies are from the other parts of the world (Lancheros& Temouri, 2013, p. 13).
The Likely Future Trends
Although there is no certainty in the prospects of global FDI in the future, it is very likely the inward FDI flows into the UK will continue declining in the near future. Recent disinvestments that have led to a decline in the inward flows may have been caused by two major factors. Firstly, there has been a change in the investment trends globally, with increased focus on the emerging markets. The emerging markets such as China, Brazil, Latin America and India have growing economies that are facilitating a rapid increase in the number of middle-income earners. For instance, the economy of China has been growing at an accelerating rate over the past one decade (Driffield & Jindra, 2012, p. 34). At the same time, China has a large population that is currently over 1.3 billion. The growing economy in China is facilitating the sprout of a group of middle class that comprises of people who are attracted to the imported products and services. In response to the increasing demand for imported products in China and other emerging markets, multinational organizations in developed countries are increasingly making investments in the emerging markets.
At the same time, the markets of most developed countries such as the UK, US and Germany have reached maturity (Driffield & Jindra, 2012, p. 34). This implies that the prospects for growth of investments in the developed countries are lower than in the emerging markets. This explains the fact that the UK market may have become less attractive to multinational corporations in countries such as France and Germany than in the emerging markets. For instance, the US multinationals are currently expanding their operations in China, Brazil and other emerging markets, with little consideration for the UK market. This explains the fact that the net investment of the US corporations in the UK market is still lower than pre-2008 level (Driffield & Jindra, 2012, p. 34). This is likely to be the main cause of disinvestment in the UK by foreign firms. Since the emerging markets are still attractive to multinational firms, it is likely that they will continue perceiving the US market as being less attractive in the near future.
The second factor is that despite the presence of bilateral trade agreements, the investments by the developed countries in the emerging markets hardly attract inward investments from the emerging economies. In other words, organizations in the emerging markets are very selective in making investments in foreign countries. For instance, the amount of investment made by Chinese companies in the UK is negligible (Driffield & Jindra, 2012, p. 35). The countries with the emerging economies are making investments in the most lucrative markets. These trends are likely to continue over the next five years, implying that the amount of inward FDI in the UK market will continue to fall.
Over the next five years, the growing markets are going to become more important for inward FDI. There is high probability that multinational companies will continue expanding their operations in the countries such as Brazil, China, Russia and India. They will compete to gain and secure such markets before they become saturated. One of the key factors that will enhance the attractiveness of such markets is lower labor costs than in the developed countries (Driffield, Love & Taylor, 2009, p. 179). This implies that the manufacturing sector will be the most important sector for inward FDI. This will not be pronounced in the services sector. This will lead to a decline in manufacturing share out of the total inward FDI flow in the UK. Similar argument applies to corporate taxes; there are higher corporate taxes in the UK than in the emerging markets.
References
Driffield, N. L. & Jindra, B. (2012). “Challenging the production function approach to assess the developmental effects of FDI.” European Journal of Development Research,
Vo. 24, No. 1, pp. 32-37
Driffield, N. Lancheros, S. Temouri, Y. & Zhou, Y. (2013). “Columbia FDI profiles: Inward FDI
in the United Kingdom and its policy context.” Accessed November 10, 2014 from
<http://www.vcc.columbia.edu/files/vale/documents/UK_IFDI_16_July_2012_-_FINAL.pdf>
Driffield, N. Love, J. H. & Taylor, K. (2009). “Productivity and Labour Demand Effects of
Inward and Outward FDI on UK Industry.” Manchester School, Vol. 77, No. 2, pp. 171-203
Lancheros, S. & Temouri, Y. (2013). “Future manufacturing: foreign direct investment trends.” Accessed
November 10, 2014 from HYPERLINK “https://www.gov.uk/government/publications/future-” https://www.gov.uk/government/publications/future-manufacturing-foreign-direct-investment-trends
Appendix
Table 1.0: UK inward FDI flow from 2003 to 2013
Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
FDI Inflow Amount (billion dollars) 27.39 57.139 177.9 156.193 200.039 89.026 76.3009 49.617 51.138 45.796 37.1001
healthcare-facilities-paper
Introduction
Healthcare facilities of today are both similar and different than what they were like two decades ago. Some of the similarities fall under organizational structure, who works in the offices, particular roles such as data record keeping, nurses, doctors, and assistants. Some of the differences include updated information systems, new laws which prohibit certain activities, more advanced degrees of the personnel, and the advancement in the medical equipment that is used in the facilities.
The similarities listed briefly above describe generalized static roles mainly which are common in any workplace. Generalized static roles are, of course, roles that do not change much throughout the years due to there being no need for change in those areas. Nurses will always be nurses, doctors will always be doctors, and these medical professionals will need other staff to run certain aspects of the healthcare facility. The organizational structure regarding these roles still has not changed much since 20 years ago in that it is still a top-down hierarchal structure where physicians tell nurses what to do and nurses direct assistants how to perform their daily or weekly duties.
The differences certainly outweigh the similarities in terms of how much has actually changed throughout the years. There are many legal issues that have been made public regarding healthcare practices which has spawned a large number of lawsuits that ultimately led to new laws in the healthcare industry. Another difference in healthcare facilities between today and twenty years ago is that the scholarly degrees of the personnel have changed from standardized licensures to a more advanced degree such as a four-year bachelors of Science in Nursing or to a specialty degree in medicine such as non-invasive thoracic surgery or pediatric psychology. Medical devices have also changed from twenty years ago and are now leaning toward a more comfort-based approach to the patient and to a more comprehensive approach to medical care.
The largest difference between healthcare facilities today and those twenty years ago, however, is that today facilities are much more dependent upon computer and information systems to run practically every aspect of the facility. Some of the important areas in healthcare facilities that use information systems are: billing, appointment scheduling, medicine dispenser units, hospital check-in and check-out, ultrasound machines in prenatal care, imaging (x-rays, upper GI’s, barium treatments, endoscopy, Electro Cardiograms, etc…), patient records, and record keeping just to name a few examples. The healthcare facilities of today would not be able to function without a comprehensive information system installed and constantly maintained. Twenty years ago much of the record keeping was done by hand. Even today there are many small facilities that still use only paper records. Currently, in the facility I work in, they are converting all paper records into digital copies and are storing all records in a large data warehouse (server) that can be accessed by authorized personnel only. Any healthcare facility that is still using older machines will ultimately have to adapt to the new information systems and to the new technology that is available in the healthcare industry, or patients will no longer continue to go to the outdated facilities for care. It is imperative that healthcare facilities keep up with technological trends for this very reason.
Information Systems in the Workplace
As previously mentioned, my workplace is converting to a new system which includes making digital copies (data entry) of all the old records into digital format (on a personal computer). This data is then stored into a data warehouse (server) where it can be mined by authorized personnel only, such as doctors or nurses for patient records or the billing department for financial records. The purpose of this transformation from the archaic pen and paper route as seen twenty years ago is to remove clutter in the facility but to also allow easier access to the facilities records / data. Twenty years ago nurses or office assistants would take a very long time just to pull a patient’s record from a large set of filing cabinet usually behind a main desk in a facility. Today with the use of information systems and personal computers (or workstations) it is much easier for a nurse to simply type in the last name of the patient and have all of their information readily accessible. With a simple click they can find the information needed in order to facilitate the process of getting the patient seen by the doctor and treated for their illness or situation as soon as possible.
Other than helping patients, nurses, and other facility staff with saving time and space, new information systems also help with the healthcare facility communication. For instance, when a doctor needs to know a question to an answer or needs information with a click of a mouse he or she can use office email programs which allow communication between employees in a secure manner. This information sharing prevents mistakes, loss of time, loss of money, and clears up a lot of confusion regarding what is going on in the facility at any given time. This type of email also allows managers (staff supervisors, HR managers, etc…) to easily contact all employees at the same time regarding news or updates for the healthcare facility or even the healthcare facility. Twenty years ago, much communication was left in the form of hand-written notes on patient files, via telephony, and by walking three floors up or down to directly communicate wasting much time in the process. The advances and progress in technology and information systems has certainly helped healthcare facilities within the last twenty years with many aspects of short as well as long term functions of the business.
Events and Technologies
In the last twenty years there have been major healthcare laws and policies which affect the overall practices in healthcare information systems. For instance, HIPAA (Health Insurance Portability and Accountability Act) was signed into effect on August 21, 1996 and this law directly deals with who is or is not allowed (authorized) to view a patient’s medical files. This law has such an influence on the practices in healthcare that even patients have a hard time getting their own medical records released directly to them. Other laws have been reforms to Medicare and Medicaid such as the age limits and income limits applied to families who receive the state benefits, but also to the income limits of the doctors who accept Medicare payments.
There have also been so many technologies that have advanced throughout the last twenty years which influence the healthcare information systems practices in facilities. The Internet is one major advancement in technology and due to the Internet facilities can hire easier, keep an eye on employees through social networking sites, contact employees 24/7 via email, face-chat with employees on off-time if needed through new iPhone and Android mobile apps, and doctors who were on-call twenty years ago had to sit by a phone or carry a beeper; today they can be anywhere within reason and still be able to come into work when expected. Some healthcare facilities are mobile in terms of home health care management facilities which technology has made it so much easier to communicate with nurses or other staff who are in the field, working.
———– Please double-check and change to your liking. I did not include a conclusion to this paper and if you need references, you will need to add them from your reading because I did not have that available to me. If you ever need anything else, just ask for me: Tutor_23 Thanks!
Economics of Happiness By Bruno S. Frey and Alois Stutzer
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Economics of Happiness By Bruno S. Frey and Alois Stutzer
In their article, Economics of Happiness, Frey and Stutzer argue that the measurement of happiness constitutes a good approximation to utility (Frey and Stutzer 25-41). Put simply, human happiness is reliant on the concept of relative utility as understood by economists. The authors begin their article by explaining how economists can be deemed as fortunate especially because their micro-economic theory is based on relative utility. They further explain that even though it is commonly believed that utility cannot be measured in absolute terms, new research on consumer happiness argues for the link between economic theory, policy, as well as, utility. Accordingly, the authors define utility as the measurement of customer satisfaction. In economics, the term refers to the state at which customers enjoy total satisfaction from purchasing and consuming particular goods and services.
Fundamentally, the purpose of the authors in the article is to call attention to the importance of consumer happiness as is brought about by the theory of micro-economics, so as to, encourage economists to carefully consider relative utility as a key constituent in economics (Frey and Stutzer 25-41). Given this, economists can, therefore, speak evocatively of growing or declining utility, and for that reason, they can expose economic behavior in relation to the increment of consumer utility. To further explicate on the concept of utility the authors explain to their readers that utility is greatly affected by consumption, as well as, wealth and the amount of time set aside for leisure purposes. In philosophy, utility is closely associated with happiness, which further illustrates the association between consumer happiness and economics.
Accordingly, philosophers have argued for the maximization of total utility for the greatest happiness of individuals and the society as a whole. Relevantly, the authors argue that employment, income, and inflation have been the greatest determinants of happiness in society. They state that these three economic factors have impacted consumer utility and happiness throughout time as they affect consumer behavior in all parts of the world irrespective of the geographical location. Particularly, the authors argue that unemployment, income, and inflation affect the happiness and well-being of individuals in a society (Frey and Stutzer 25-41). However, because utility cannot be directly measured as previously stated, this measurement is established as a self-reported subjective report from individual consumers for the estimation of the degree to which the economic theory affects utility. Accordingly, individuals may experience increased utility when they are employed as compared to when they are not employed. This is because employment has been closely associated with the social welfare of individuals. Those who are not employed are more likely to have very low income, which in turn affects their access to the basic needs and requirements.
Employment grants individuals various things that bring about satisfaction such as access to medical facilities, as well as, all other social institutions (Frey and Stutzer 25-41). Income also plays a great role in consumer utility, as it is through the acquisition of income that individuals gain the power to attain their daily needs and requirements. Income equals money, and money is what is needed for the purchase of products and services for consumption. For that reason, individuals who have access to a substantial amount of income are more likely to experience increased happiness and utility as opposed to those who do not have access to income.
Conclusively, inflation is the third economic factor that Frey and Stutzer have associated with consumer utility and happiness. According to the authors, inflation affects consumer utility in that it determines what individuals have access to (Frey and Stutzer 25-41). When inflation occurs, the price of most goods and services increase, and because the income does not change as a result of inflation, individuals with a low income have limited access to certain products and services. This limited access, therefore, interferes with consumer utility as it reduces the amount of things that individuals have access to. As the authors explain, the concept of utility is applied by economists in economic models such as the indifference curve, which illustrate the permutation of products and services that individuals or the society accept as the commodities for the assurance of a level of satisfaction. Put simply, economists have used the concept of utility to determine some of the economic factors affecting utility and happiness, which according to Frey and Stutzer include employment, income, and inflation. In essence, relative utility is interpreted as a social welfare function and the institutions that make up the society are solely responsible for utility in society (Frey and Stutzer 25-41). The authors refer to this as welfare economics, and they argue that the institutions and authorities in a society determine the level of happiness and utility for individuals. The authors conclude their article by explaining that the extent of political centralization or decentralization has an impact on the happiness and utility of individuals in a society (Frey and Stutzer 25-41). the authors also explain that the type of democracy practiced in a country or state determine individual happiness as it determines the level to which individuals practice their economic rights.
Work Cited
Frey, Bruno S. and Stutzer, Alois. Economics of Happiness. World Economics: Journal of
Current Economic Analysis and Policy, 3.1. (2002): 25-41.