International Business - Seminar Room Questions

Individual weekly contribution to Seminar Topic 4 discussion and questions

Read the short case ''Volkswagen in Russia”.

It is located on p. 225 in your textbook or you can access it from the e-Library resources provided for this course on the learnonline site.   

Answer the questions below. Do NOT answer the questions at the end of case in the textbook.

Attach a word document for each post with the following format:

FAMILYname-Firstname-week#.doc

"By 2015, Volkswagen had invested over $1 billion in production in Russia. General Motors and Toyota had also announced investments of over $1 billion to boost Russian production up to 300,000 units by 2010, and Fiat had indicated that it would make investments to bring its Russian production up to 300,000 as well. In total foreign carmakers had invested over $5 billion in Russian assembly operations by 2014. Meanwhile, analysts continued to predict that the Russian car markets would grow at a healthy pace and exceed that of Germany by 2020. In 2014, however, the market took a sharp turn for the worst". 

In light of this statement discuss the following questions:

1. Political ideology is an important determinant of government policy toward FDI. Ideology ranges from a radical stance that is hostile to FDI to a noninterventionist, free market stance. Between the two extremes is an approach best described as pragmatic nationalism. Given the scenario outlined above and detailed in the case, what approach best describes the Russian government approach? Why?

2. The benefits and costs of FDI to the host (foreign) country and to the home (source) vary considerably. In light of Volkswagen’s experience what are the benefits and costs? And to the host country? What theories do you draw upon to explain your arguments?  Why?

(300-600 words)