Reference no: EM133299172

Investment Scenario

The leadership of a small, but resource-rich, nation in North America recently changed. The new leaders have declared their intention to improve their aging industrial infrastructure, generate new jobs, and increase trade with the United States and Canada. In order to-do-this, the leaders have changed decades-old policies that kept all foreign investment out, and have stated they are open to any form of investment to help them as they pursue their new goals.

The Finance Minister of the nation meets with his economists and examines the question of how to bring the most money into his nation. His staff ponders the question and tells him that he has three options:

Get banks overseas to loan money to help companies in the country.

Ask the U.S. or Canadian government to give his country the money in the form of gifts or grants to build infrastructure

Try to convince businesses in the U.S. or Canada to use their own money to fix up or buy factories in the country.

The Finance Minister mulls over these options. They all have strong points and weak points. He then asks his staff the following questions:

1. What are the benefits of each option?

- consider factors as diverse as how quickly the country could get the investment money, how people in the country might feel about the approach taken, and which promises the most money.

2. What are the drawbacks of each option?

- consider the same factors.

3. What are some effects, both good and bad, of each option in areas that are not as obvious, such as the environment, cultural globalization, standard of living?