Louis T. Wells

Test of a Product Cycle Model of International Trade: U. S. Exports of Consumer Durables

The cycle, 153. — High-income products, 155. — Product variations, 158. — Economics of scale, 160. — Transportation and tariffs, 160. — Conclusions, 161.

Sovereignty en garde: negotiating with foreign investors

Governments must choose between general policies and individual negotiations to reach agreements with foreign investors. General policy leaves nothing to be negotiated. But once negotiation is selected, governments face difficult choices over how to conduct ne otiations. No single choice of organizational structure or administrative process is optimal for all countries or for all industries. Each organizational choice carries a range of economic and political costs and benefits that are valued differently by the domestic and foreign interests affected by the negotiations outcome. Interviews with government officials in four Asian countries and corporate executives in four industries, all involved in international business negotiations between 1978 and 1982, demonstrate that different governments should and do choose different approaches to negotiating with foreign firms. Even single countries use different approaches at different times and with different industries. Moreover, the managerial choices of structure and process are not random. Rather, they are influenced by a governments general strategy toward foreign investment, the “political salience” of a given investment, and the degree of competition among countries for a specific investment. Ultimately, a governments management of international business negotiations shapes its effectiveness in negotiating with foreign firms and in competing for foreign investment.

Developing Country Investors in Indonesia

* This material is based upon work supported by the National Science Foundation under Grant No PRA78–10238. Any opinions, findings, and conclusions or recommendations expressed in this Publication are those of the author and do not necessarily reflect the views of the National Science Foundation.

Administrative Barriers to Foreign Investment: Reducing Red Tape in Africa

The book consists of two papers which provide an overview of administrative barriers in Africa, and a very in-depth look at how one country, Mozambique, used a very large foreign investment as a mechanism to begin to tear them down. The first paper is based on a series of country-specific studies on administrative barriers done by Foreign Investment Advisory Service (FIAS) and the United States Agency for International Development. These studies covered Ghana, Mozambique, Namibia, Tanzania, and Uganda. Each country study relied on review of primary materials, laws, and regulations. The second paper is a detailed look at how the administrative barriers that existed in Mozambique threatened to derail the huge Mozal aluminum smelter that was proposed by South African investors. Not only were the barriers overcome for this special project but also the Government used the knowledge gained in the process to reduce barriers for all investors and establish institutions that could facilitate other investments. The message in both papers is that administrative barriers constitute a significant impediment to foreign direct investment in Africa. Many of the administrative procedures required of investors have no real justification. Removal of unnecessary barriers and streamlining other administrative procedures require detailed efforts by governments involving the exercise of significant political leadership.

The Multinational Business Enterprise: What Kind of International Organization?

The recent growth in the size and number of private business enterprises that operate in many countries has generated a great deal of speculation as to whether a form of international organization has been created which is able to frustrate the policies of the traditional nation-state. The enterprise with subsidiaries scattered around the globe clearly has the potential to evade the influence of many governmental policies. The firm can circumvent a tight monetary policy in one country by having an affiliate borrow in another country and transfer the funds across national borders. If direct transfers of capital from abroad are restricted, transfer prices, royalty payments, or open accounts between affiliates can be adjusted to bring in the needed financial resources. If taxes are high in one jurisdiction, profits that would be subject to tax can be shifted to another tax jurisdiction through manipulation of affiliate transactions. National labor unions and comparatively harsh labor legislation can be frustrated by moving production to facilities in another country when strikes or higher costs threaten a particular market. A governmental program aimed at increasing technical and managerial training to provide a larger domestic supply of skilled personnel may only generate technicians or managers for the multinational enterprise to shift out of the country, back to its head office or to other countries. Technology developed in one country—often through governmental support and often related to defense needs of governments—can be leaked quickly to other countries through the communication network of the multinational enterprise.

Technology crossing borders: the choice, transfer, and management of international technology flows

The empirical work in this book examines three issues in the transfer of technology: 1) how managers, public and private, choose the kinds of technology they import or export; 2) how multinational enterprises decide on the channels through which they transfer technology and how that choice affects the recipient firm abroad; and 3) how multinational enterprises manage certain of their relationships with overseas affiliates that import, use, modify, and generate technology. This book makes no attempt to summarize all the literature in the fields on which it reports; rather, it presents a group of clearly related empirical studies that draw on a common set of concepts. On some points the studies are in agreement with the conventional literature; on others, they depart strikingly from the more commonly accepted theories.

The Public-Private choice: The case of marketing a country to investors

tag=1 data=The public-private choice: the case of marketing a country to investors. Louis T. Wells and Alvin G. Wint tag=2 data=Wells, Louis T.%Wint, Alvin G. tag=3 data=World Development, tag=4 data=19 tag=5 data=7 tag=6 data=1991 tag=7 data=749-761. tag=8 data=INVESTMENT tag=10 data=This article argues that in organizing to promote foreign investment, governments choose among organizational structures that have differing amounts of private and public sector involvement. tag=11 data=1991/3/11 tag=12 data=91/0923 tag=13 data=CAB

PRIVATE POWER IN INDONESIA

Abstract The Asian currency crisis led to the collapse of agreements that Indonesia had negotiated for private electric power only a few years earlier. The ensuing struggle with investors created bad publicity and cost the country several hundred million dollars. As Indonesia in 2007 was designing a new law that would pass the constitutional test and encourage private investors in electric power, it was not clear that officials had fully understood the lessons of the earlier disputes. The original problems lay less in the legal framework than in lack of information about deals elsewhere, in the personal interests of highly placed individuals, and in the institutional structure and procedures for negotiations. The resulting power purchase agreements produced high electricity prices, imbalanced allocation of risks and rewards, and unwillingness to use the most effective defences when disputes arose. Learning from the past should help officials avoid similar mistakes in the future.

How Far Should Global Products Go

Some authorities in international business have suggested that international markets are becoming increasingly homogeneous, causing more firms to offer global products. Vachani and Wells based on a study of the product decisions of Indian subsidiaries of five multinationals argue that there remain important consumer segments that have special needs which are not met by global products. According to Vachani and Wells, decisions of multinationals and local firms to cater to the special needs of various consumer segments in developing countries depend on four variables: the structure and competitive conditions of their industry segments, the ability to use their traditional competitive advantage in different segments, the ease with which their usual product lines can be extended into new segments, and the availability of more special products elsewhere within the multinational enterprise.

Marketing Strategies to Attract Foreign Investment

Although the decade of the 1980s has seen a major increase in a range of efforts by both developing and industrialised countries to market themselves as attractive locations for foreign direct investment, existing research has been biased toward the role of investment incentives and policy reform in these activities.1 Current efforts, however, include not only the use of investment incentives and attempts to improve the investment climates of countries, but also marketing techniques such as advertising, missions, seminars, direct marketing of various forms, and service activities. The goal of these marketing techniques is to inform prospective investors about a country’s potential as an investment site, and to persuade them to set up operations in that country. For this study, we defined these marketing efforts as ‘investment promotion’. We set out in this research to add to the existing knowledge by focusing on aspects of investment promotion, especially the effectiveness of particular promotional techniques, that remain under-researched.