Fighting the Wrong Enemy or Financial Statement Analysis

Fighting the Wrong Enemy: Antiglobalist Activists and Multilateral Enterprises

Author: Edward M Graham

Antiglobalist forces have been gaining greater momentum in recent years in their efforts to reverse what they view as the negative effects of an integrating global economy. Their influence was felt earlier when efforts to create a Multilateral Agreement on Investment (MAI) ended in failure in 1998 after France left the bargaining table at the Organization for Economic Cooperation and Development, effectively killing the initiative.

Through an evaluation of the MAI itself and the issues raised by its opponents, Edward M. Graham takes a fresh look at the growing backlash against globalization. He first explores whether the MAI negotiations failed due to political maneuvering by antiglobalist nongovernmental organizations (supported by US organized labor) or because of irreconcilable differences among the negotiating parties over the issue of foreign direct investment. He then thoroughly assesses antiglobalist assertions that the activities of multinational firms have had negative effects on workers both in the home (investor) and host (recipient) nations, with a special focus on developing nations. An important finding is that multinational firms tend to pay workers in developing nations wages that are significantly above prevailing wages. Graham then examines the issue of globalized economic activity and the environment, finding that economic growth in developing nations can lead to increased environmental stress but also finding that foreign direct investment can lead to reductions in this stress.

The book assesses whether a negotiation to create a comprehensive agreement on investment should be included in a multilateral negotiating round at the World Trade Organization in the near future. Graham indicates that, while many developing nations would accept such rules, it might be premature to press for a comprehensive agreement at this time. Rather, a limited investment agenda might be both more feasible and more productive.

What People Are Saying

Theodore H. Moran
Theodore H. Moran, Director and Karl F. Landegger Professor of International Business Diplomacy, Georgetown University:

. . . this volume can occupy a pivotal place in setting the terms for discussion of foreign direct investment and globalization.

Table of Contents:

	Preface	xi
	Acknowledgments	xv
1	Introduction	1
	The Dog That Did Not Bark	1
	FDI and Its Benefits	3
	The MAI Negotiations Falter	7
	The Negotiations Fail	10
	An Economic Autopsy of the MAI	12
2	The MAI and the Politics of Failure: Who Killed the Dog?	15
	The MAI Is Conceived	20
	Deep Internal Difficulties Emerge	25
	The NGOs Enter the Stage	35
	The Cavalry That Did Not Arrive	49
3	Dissecting the MAI	51
	The Structure of the MAI	54
	Goals, Scope, and Applications	55
	Obligations of Host Countries	57
	Dispute Settlement Procedures	74
	Exceptions, Safeguards, and Reservations	78
	The Mouse That Might Have Roared?	80
4	Globalization, Foreign Direct Investment, and Labor	81
	Direct Investment and Wages in Developing Countries	84
	Globalization and the Sweatshop Issue	99
	US Direct Investment Abroad and Employment in the United States	106
	Does Globalization Reduce Workers' Bargaining Power?	125
	Summary and Conclusion	129
5	Globalization, Foreign Direct Investment, and the Environment	131
	The Environmental Impact of Globalization and Growth	134
	Foreign Investment: Can It Be Made Part of the Solution to the Environmental Problem?	148
	Toward Global Rules That Are Environmentally Friendly	158
	Conclusion	161
6	The MAI and the Developing Countries	165
	The Changing Position of Developing Countries on Foreign Direct Investment	167
	Changing Attitudes Toward Multilateral Rule Making	173
	Developing Countries and the Provisions of the MAI	175
	Is There a Deal Breaker?	183
	Is Any Negotiation on Investment Between Developing and Developed Countried Doomed to Failure?	184
7	Where Does the Multilateral Investment Agenda Go From Here?	185
	Arguments For and Against Multilateral Investment Rules	186
	Is There a Constituency for Multilateral Investment Rules?	190
	A Comprehensive WTO Investment Agreement: A Bridge Too Far?	198
Appendix A	Productivity and Wage Determination	201
Appendix B	Is Foreign Direct Investment a Complement to Trade?	207
	References	213
	Index	223
	Tables
Table 4.1	Annual Compensation per worker by foreign affiliates and parent companies of US multinational corporations, by industry, 1996	92
Table 4.2	Average compensation paid by foreign affiliates and average domestic manufacturing wage, by host-country income, 1994	94
Table 4.3	US direct investment position abroad by host-country income, 1997	107
Table 4.4	Countries in the sample by income category in 1985 and 1995	108
Table 4.5	Net fixed assets of foreign manufacturing affiliates of US multinational corporations and of US manufacturing firms, by host-country income, 1996	114
Table 4.6	US FDI and US unemployment	116
Table 4.7	Trade in goods among foreign affiliates, their US parents, and unaffiliated firms by host-country income, 1995	118
Table 4.8	Coefficients indicating relationship between US exports or imports of manufactured goods and US direct investment abroad	120
Table B.1	FDI-related activities and trade	212
	Figures
Figure 4.1	Outflows of US foreign direct investment by host-country income (1995 income categories)	109
Figure 4.2	Shares of US foreign direct investment outflows by host-country income (1995 income categories)	109
Figure 4.3	Outflows of US foreign direct investment by host-country income (1985 income categories)	110
Figure 4.4	Shares of US foreign direct investment by host-country income (1985 income categories)	110
Figure 4.5	Outflows of US equity capital by hot-country income (1995 income categories)	111
Figure 4.6	Shares of US equity capital outflows by host-country income (1995 income categories)	112
Figure 4.7	Outflows of US equity by host-country income (1985 income categories)	112
Figure 4.8	Shares of US equity capital outflows by host-country income (1985 income categories)	113
Figure 5.1	Income and pollution	138
Figure 5.2	The optimum level of pollution control	151

Book review: Cucina del Sole or Swedish Christmas

Financial Statement Analysis: A Valuation Approach

Author: Leonard Soffer

Finally! Financial Statement Analysis: A Valuation Approach is the first book to show readers how to use financial statement information to actually prepare a valuation.

• Includes All of the Commonly Used Valuation Models, and the five models derived from basic discounted cash flow theory: the dividend discount model, the flows to equity model, the free cash flow model, the adjusted present value model, and the residua! income model. The book also provides an unusually rigorous treatment of valuation with multiples.
• Starbucks Continuing Case. !n addition to numerous real-world examples, the Starbucks financial statements are consistently integrated throughout the chapters to show how financial statement analysis and valuation are applied to a real company.
• Integration of Accounting, Finance, and Business Strategy. These concepts are integrated throughout the text so that readers see the connections among them. The book provides a framework for analyzing business strategy and discusses the link between strategy and valuation. Headers learn about business strategy and how to relate a firm's strategic position to the assumptions in a valuation.
• Unique Presentation of Topics. The hook includes chapters on using financial statement disclosures to value companies with pension plans and companies with employee stock option plans.