Question

Question 6 . Elaborate and comment on the following

1. Differences between Multinational corporation investment and Foreign direct investments
2. Financial aid come in a number of different types and for different users.
3. Children have costs and benefits to their parents

Answer 1

1.

Multinational corporation (MNC) can be defined as an enterprise that conducts and controls productive activities in more than one country. 85 per cent of MNCs have their home bases in one of the OECD members. Some examples of MNCs are Coca-cola, Pepsi, IBM, Nike, Sony, Toyota, Shell and Nestle.

MNCs represent a major force in the rapid globalization of world trade.

MNCs control more than 70% of world trade and dominate the production, distribution, and scale of many goods from developing countries.

Almost 25% of international exchanges involved intra-firm MNC sales of intermediate products or equipments from one nation's subsidiary to another.

Foreign Direct Investment (FDI) is a long-term investment made by a private firms in the production of goods or services in another country. This can take two forms.

A. Greenfield Investment in which the company establishes new operations and/or facilities in another country. Nike establishing a new factory in Indonesia is an example of greenfield investment. Expanding existing facilities is also taken as greenfield investment. Greenfield FDI usually follows strong economic performances in the country. East and South-East Asian economies had and still attracting much greenfield FDI. Some economists believe that greenfield FDI have sustained rapid growth in China (see also the FDI article related to China). Rapid economic growth and potential for more growth in China also attract this sort of FDI.

B. Mergers and Acquisitions (M&As) in which the company merges or acquires the control of a local company. This is a fast and easy way to either privatize or restructure state-owned enterprises. In recent years, this component of FDI has increasingly become dominant.
"According to UNCTAD's World Investment Report (1998), Latin America recorded the highest increase in FDI (USD 24 billion) among developing countries between 1996 and 1997, mostly on the back of higher M&As. As a result, the share of M&As in FDI rose sharply from 36 per cent in 1995 to 79 per cent in 1997. A high proportion (45 per cent) of FDI in 1997 was accounted for by majority-owned M&As (which involved transfer of voting rights in excess of 50 per cent to foreign firms.) Privatization constituted 19 per cent of FDI in Latin America."

2.

Types of financial aid for students and colleges

Grants

A grant is a form of financial aid that doesn’t have to be repaid (unless, for example, you withdraw from school and owe a refund, or you receive a TEACH Grant and don’t complete your service obligation). A variety of federal grants are available, including Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Teacher Education Assistance for College and Higher Education (TEACH) Grants, and Iraq and Afghanistan Service Grants.

Scholarships

Many nonprofit and private organizations offer scholarships to help students pay for college or career school. This type of free money, which is sometimes based on academic merit, talent, or a particular area of study, can make a real difference in helping you manage your education expenses.

Work-Study Jobs

The Federal Work-Study Program allows you to earn money to pay for school by working part-time.

Loans

When you receive a student loan, you are borrowing money to attend a college or career school. You must repay the loan as well as interest that accrues. It is important to understand your repayment options so you can successfully repay your loan.

Aid for Military Families

There are special aid programs or additional aid eligibility for serving in the military or for being the spouse or child of a veteran.

Learn About Aid for Military Families

Aid for International Study

Federal student aid may be available for studying at a school outside the United States, whether you’re studying abroad or getting your degree from an international school.

3. USDA recently issued Expenditures on Children by Families, 2015. This report is also known as “The Cost of Raising a Child.” USDA has been tracking the cost of raising a child since 1960 and this analysis examines expenses by age of child, household income, budgetary component, and region of the country.

Based on the most recent data from the Consumer Expenditures Survey, in 2015, a family will spend approximately $12,980 annually per child in a middle-income ($59,200-$107,400), two-child, married-couple family. Middle-income, married-couple parents of a child born in 2015 may expect to spend $233,610 ($284,570 if projected inflation costs are factored in*) for food, shelter, and other necessities to raise a child through age 17. This does not include the cost of a college education.

Where does the money go? For a middle-income family, housing accounts for the largest share at 29% of total child-rearing costs. Food is second at 18%, and child care/education (for those with the expense) is third at 16%. Expenses vary depending on the age of the child.

As families often need more room to accommodate children, housing is the largest expense.

We did the analysis by household income level, age of the child, and region of residence. Not surprising, the higher a family’s income the more was spent on a child, particularly for child care/education and miscellaneous expenses.

Expenses also increase as a child ages. Overall annual expenses averaged about $300 less for children from birth to 2 years old, and averaged $900 more for teenagers between 15-17 years of age. Teenagers have higher food costs as well as higher transportation costs as these are the years they start to drive so insurance is included or a maybe a second car is purchased for them.

Regional variation was also observed. Families in the urban Northeast spent the most on a child, followed by families in the urban West, urban South, and urban Midwest. Families in rural areas throughout the country spent the least on a child—child-rearing expenses were 27% lower in rural areas than the urban Northeast, primarily due to lower housing and child care/education expenses.

Child-rearing expenses are subject to economies of scale. That is, with each additional child, expenses on each declines. For married-couple families with one child, expenses averaged 27% more per child than expenses in a two-child family. For families with three or more children, per child expenses averaged 24% less on each child than on a child in a two-child family. This is sometimes referred to as the “cheaper by the dozen” effect. Each additional child costs less because children can share a bedroom; a family can buy food in larger, more economical quantities; clothing and toys can be handed down; and older children can often babysit younger ones.

Benefits

1. It may boost your brain power of parents

While it may also be the benefit of less stress and the ability to gain more knowledge through schooling, studies show that having kids later in life can make you mentally sharper as you age.

One study published in the Journal of the American Geriatrics Society tested 830 middle-aged women to determine whether there was a link between having a baby at a later age and brain power. They found that women who had their last child after the age of 35 had sharper cognition and verbal memory. They also found that women who had their first child after the age of 24 were better at problem-solving than their peers who had children before age 24.

2. Your child may have a reduced risk of injury

Of course, you're going to protect your child as best you can, no matter your age. However, several studies point to the fact that a child's risk of experiencing an unintentional injury that requires medical attention declines with increasing maternal age.

One study in particular, published in the British Medical Journal in 2012, found that at age three a child's risk of unintentional injury declined from 36.6 percent for moms aged 20 to 28.6 percent for moms aged 40. Another more recent study out of Japan, which analyzed the risks of unintentional injuries and hospital admissions at 18 and 66 months according to maternal age, reached the same conclusion.

"Although the exact reasons for fewer injuries aren't known, it is clear that one health benefit of being born to an older mother is a decreased likelihood of experiencing an unintentional injury," says Patricia Salber, M.D., founder and Editor-in-Chief of The Doctor Weighs In.

3. You might be more prepared emotionally

There's an undoubted sense of maturity that comes along with age. (Just think about how much you've changed since your teens!) Research suggests that maturity plays a role in better parenting.

In a March 2017 study published in the journal European Journal of Development, Dutch researchers looked at the psychosocial development of two groups of children at ages 7, 11 and 15. One group was born to moms older than 31 and the other was born to moms younger than 31. When analyzing their psychosocial development, they were surprised to find that older moms were less likely to scold or physically discipline their kids.

"Overall, the children of older moms were better behaved, well socialized and emotionally healthy in their pre-teen years," says Salber. "In other words, older moms' more relaxed parenting behaviors appear to have paid off for these youngsters."

4. Your child is likely to be more tech-savvy and better educated

The longer you wait to have children, the more likely your child will grow up understanding more advanced levels of technology.

"Children of older parents benefit from the educational, technological and social progress that has been made during the years of delayed childbearing," says Kameelah Phillips, M.D., OB/GYN in New York City. "A Swedish study noted that when these advances are considered, children of older parents tend to be healthier and more educated."

5. You might be more financially stable

Countless research backs the theory that health outcomes are often tied to how much money is in the bank. If you have the advantage of finishing up your degree and putting your time into developing your professional career, it only makes sense that you're more likely to earn a higher salary than a mom who had a child before establishing her career.

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