Complete the following paragraph to explain the effect of multinational enterprises on a host nation's economy. Assume a large pharmaceutical company based in Germany, where the corporate tax is 37% decides to relocate some production of pharmaceuticals to Ecuador, where the corporate tax is 8%. If the parent company from Germany purchases pharmaceuticals from its subsidiary in Ecuador at grossly inflated prices, the result is a neutral impact on Ecuador's economy, and a positive impact on Germany's economy. As a result, the regarding the German subsidiary locating in Ecuador. governments of Germany and Ecuador are likely to experience conflict Now, assume that a major national election takes place in Ecuador. As a result, the Indigo party has come to power. Assume that the Indigo party's main political stance is nationalization of all pharmaceutical facilities. Based on this knowledge of the Indigo party's politics, businesses in Germany are likely to support ▼ the election of the Indigo in Ecuador. Which of the following are the most likely courses of action for German pharmaceutical businesses with operations in Ecuador as a result of the Indigo party rising to power? Check all that apply. The pharmaceutical businesses will shift a larger portion of their production to Ecuador More businesses in the pharmaceutical industry will locate multinational enterprise operations in Ecuador Over concerns of expropriation, the pharmaceutical businesses will attempt to interfere with Ecuadorian politics The pharmaceutical businesses will withdraw operations from Ecuador The pharmaceutical businesses will take no action to engage in Ecuadorian politics
Complete the following paragraph to explain the effect of multinational enterprises on a host nation's economy. Assume a large pharmaceutical company based in Germany, where the corporate tax is 37% decides to relocate some production of pharmaceuticals to Ecuador, where the corporate tax is 8%. If the parent company from Germany purchases pharmaceuticals from its subsidiary in Ecuador at grossly inflated prices, the result is a neutral impact on Ecuador's economy, and a positive impact on Germany's economy. As a result, the regarding the German subsidiary locating in Ecuador. governments of Germany and Ecuador are likely to experience conflict Now, assume that a major national election takes place in Ecuador. As a result, the Indigo party has come to power. Assume that the Indigo party's main political stance is nationalization of all pharmaceutical facilities. Based on this knowledge of the Indigo party's politics, businesses in Germany are likely to support ▼ the election of the Indigo in Ecuador. Which of the following are the most likely courses of action for German pharmaceutical businesses with operations in Ecuador as a result of the Indigo party rising to power? Check all that apply. The pharmaceutical businesses will shift a larger portion of their production to Ecuador More businesses in the pharmaceutical industry will locate multinational enterprise operations in Ecuador Over concerns of expropriation, the pharmaceutical businesses will attempt to interfere with Ecuadorian politics The pharmaceutical businesses will withdraw operations from Ecuador The pharmaceutical businesses will take no action to engage in Ecuadorian politics
Chapter18: International Trade And Finance
Section: Chapter Questions
Problem 7SQ
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Transcribed Image Text:Complete the following paragraph to explain the effect of multinational enterprises on a host nation's economy.
Assume a large pharmaceutical company based in Germany, where the corporate tax is 37% decides to relocate some production of pharmaceuticals
to Ecuador, where the corporate tax is 8%. If the parent company from Germany purchases pharmaceuticals from its subsidiary in Ecuador at grossly
inflated prices, the result is a neutral
impact on Ecuador's economy, and a positive impact on Germany's economy. As a result, the
regarding the German subsidiary locating in Ecuador.
governments of Germany and Ecuador are likely to experience
conflict
Now, assume that a major national election takes place in Ecuador. As a result, the Indigo party has come to power.
Assume that the Indigo party's main political stance is nationalization of all pharmaceutical facilities. Based on this knowledge of the Indigo party's
politics, businesses in Germany are likely to support ▼ the election of the Indigo in Ecuador.
Which of the following are the most likely courses of action for German pharmaceutical businesses with operations in Ecuador as a result of the Indigo
party rising to power? Check all that apply.
The pharmaceutical businesses will shift a larger portion of their production to Ecuador
More businesses in the pharmaceutical industry will locate multinational enterprise operations in Ecuador
Over concerns of expropriation, the pharmaceutical businesses will attempt to interfere with Ecuadorian politics
The pharmaceutical businesses will withdraw operations from Ecuador
The pharmaceutical businesses will take no action to engage in Ecuadorian politics
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