Economics of Transnational Corporations

Fall Term, 2014/2015 Academic Year

Lecturer(s):

Andrs TTNYI, assistant lecturer

Department:

Department of World Economy

Office hour:

Wednesdays 13:40 15:10

Availability:

Phone number: 482-5406

Room: main building room 142
Email address: andras.tetenyi@uni-corvinus.hu

Prerequisites to the course:

none
Credits
6
Number of classes
2+2 (one 90 minute lecture and one 90 minute seminar per week)
Class time and room
Lectures: Wednesdays 8:00-9:30 am (Room C105). Seminars: Thursdays 9:50-11:20 am
(Room C105).
Objectives and description of the course:
The goal of the course is to introduce students to the wider world economic effects of the
activities of transnational corporations, as well as the driving forces behind these companies.
National competitiveness is increasingly important today in attracting TNC investments, and
therefore the course puts a special emphasis on ways how nation states can influence TNC
behavior and strategy. The course therefore has a macro-approach, but various micro level
(business-studies) issues are also analyzed. Besides theoretical knowledge, the students will
also gain practical experience through seminar group work and simulation games. The course
aims to steer clear of oversimplifying generalizations concerning TNCs and embraces a
complex approach.
Detailed class schedule, weeks 1 to 14:
Date of class
Week 1

Week 2

Topics to be discussed, readings required for the class

Lecture: Introduction. The concept and framework of the course.
Thinking about transnational corporations. Perceptions and
ideologies
Seminar: Main concepts and definitions related to transnational
corporations and foreign direct investment (FDI)
Reading: Cohen ch. 1, 2
No class!

Week 3

Lecture: National competitiveness. Concepts and measurement.

Week 4

Week 5

Week 6

Week 7

Global trends in FDI flows. (double lecture)

Reading: UNCTAD World Investment Report 2010 and 2011,
relevant chapters.
Lecture: Regional and sectoral trends in global FDI flows
Reading: UNCTAD World Investment Report 2010 and 2011,
relevant chapters.
Seminar: discussion of article Besada Wang Whalley (2008).
Lecture: Transnationalization of corporations. Incremental
transnationalization vs. born global companies.
Reading: Cohen ch. 4, 6.
Seminar: Motives for FDI group work
Lecture: Theories explaining transnational corporations I.
Schumpeterian innovation, transaction costs and the product life
cycle
Reading: Ietto-Gillies
Seminar: discussion of article UNCTAD 2011. One student
presentations
Lecture: Theories explaining transnational corporations II. The OLI
paradigm, Porters value chain approach.
Reading: Dunning (2000)
Seminar: Case studies. One student presentation

Week 8

Mid term exam

Week 9

Week 15

Lecture: Strategies of TNCs. Offshoring and outsourcing

Reading: Bhagwati Panagariya Srinivasan (2004)
Seminar: discussion of the article Jensen (2006). One student
presentation
Lecture: The theory and practice of investment promotion
Reading: UNCTAD World Investment Report 2003, ch III-IV
Seminar: two student presentations
Lecture: International regulation of transnational corporations
Reading: Cohen ch. 11
Seminar: investment promotion situation game
Lecture: FDI and TNCs in CEE and Hungary. The role of FDI in the
transformation process.
Reading: Kalotay (2001)
Seminar: discussion of article Kalotay (2007). One student
presentation
Lecture: Outward FDI from Central and Eastern Europe.
Seminar: Case studies. One student presentation
Remaining student presentations. Conclusions of the course. Review
for the final exam, assessment of students etc.
Final exam

January

Make up exams

Week 10

Week 11

Week 12

Week 13
Week 14

Assessment, grading:
Midterm exam

35 per cent

Final exam
Home reviews (best 3)
Presentation
Class activity

35 per cent
15 per cent
10 per cent
5 per cent

During the semester, students are required to read 4 articles for the seminars. From these
articles, they have to write and hand in short, 1-1,5 page summaries. These summaries must
also contain the students own opinion and criticism about the article. The summaries must be
sent by email to the instructor by Monday 8 AM, before the class discussing the relevant
article. This deadline is strict, and no excuses will be accepted. Each article review can be
awarded 1 to 5 points. Results of the best three reviews will count. Reviews sent after the
deadline, but before the seminar are worth maximum 2 points. There is no possibility to send
article reviews after the seminar that discusses the article. The best three reviews will
constitute 15 per cent of the final grade.
Students will also have to prepare group presentations. In the presentations, the students must
select a country, a sector and a specific transnational company that has recently made an
investment in that region. They must focus on identifying the various competitive advantages
(national competitiveness) of the country that can make it attractive to international
businesses. Then, through the case study of their selected company, they must analyze why
that specific company decided to invest in their chosen country. Each presentation should be
around 20-25 minutes. Further requirements concerning the presentations will be discussed on
the first seminar.
Other seminars during the year will have group work and case studies, for which students will
not have to prepare in advance. The only exception is the seminar on week 11, when students
will be assigned into groups the week before, and will be given detailed instructions on how
to prepare.
The midterm exam and the final exam at the end of the semester will be made up of short, but
not test-type questions. The final exam at the end of the semester only covers material from
the second half of the semester. Students may retake the midterm exam at the end of the
semester, in this case they will write their final exam from the material of the entire semester,
and this will count as 70 per cent of the final grade. For rules on retaking the final exam, see
the Corvinus Universitys Study and Exam Regulations.
All students, even those not presenting in class, are expected to be prepared for seminars. You
should devote at least 15-20 minutes before seminar classes to familiarize yourself with the
subject. Class attendance sheets will be taken. Anyone missing more than 25 percent of
classes (7 lectures or seminars) will not be able to pass the course. Also, please try not to be
late.
Grades are non-negotiable.
Compulsory readings:
The material of the lectures and seminars is compulsory for the exams. Lectures will loosely
follow the textbook by Stephen D. Cohen [Multinational Corporations and Foreign Direct
Investment. Oxford University Press 2007; referred to as Cohen in the syllabus]. However,
not all material of the lectures is included in this textbook, so taking good notes and following

seminar discussions is important. The following book chapters and articles are also
compulsory reading:

UNCTAD (2013): World Investment Report. Part I. www.untad.org/wir

UNCTAD (2012): World Investment Report. Part I. www.untad.org/wir
UNCTAD (2003): World Investment Report. Chapters 3-4 www.untad.org/wir
Kalotay, Klmn (2001): The Contribution of Foreign Direct Investment to
Transition Revisited. The Journal of World Investment 2(2): 259-276
Ietto-Gillies, Grazia: The nation-state and the theory of the transnational
corporation.
http://www.econ.cam.ac.uk/cjeconf/delegates/iettogillies.pdf
Dunning, John (2000): The eclectic paradigm as an envelope for economic and
business theories of MNE activity. International Business Review 9: 163-190
Bhagwati, Jagdish Panagariya, Arvind Srinivasan, T.N. (2004): The Muddles
over Outsourcing. Journal of Economic Perspectives 18(4): 93-114.
Reinhardt, Forest L. Stavins, Robert N. Vietor, Richard H.K (2008): Corporate
Social Responsibility Through An Economic Lens. NBER Working Paper 13989
Blomstrm, Magnus Kokko, Ari (2003): The economics of foreign direct
investment incentives. In: Heinz Herrmann Robert E. Lipsey (eds): Foreign
direct investment in the real and financial sector of industrial countries. Springer.
http://www2.hhs.se/eijswp/168.pdf

The four articles to be read and critically summarized for the seminars are:
Besada Wang Whalley (2008): Chinas growing economic activity in Africa.
NBER Working Paper 14024
UNCTAD (2011): World Investment Report Part IV, sections, A, B & C.
Nathan M. Jensen (2006): Nation-States and the Multinational Corporation.
Introduction. Princeton University Press
Kalotay Klmn (2007): The Rise of Russian Transnational Corporations. The
Geneva Post Quarterly, 2(1): 55-85
See detailed class schedule above for due dates. All articles will be linked on my website.
Lecture slides and handouts can also be found at my website: sites.google.com/site/atetenyi.
As always, the lecture slides are only crude outlines and they do not substitute taking notes in
class. All comments and feedback concerning lectures, slides, selected readings etc. are
welcome.