The Ultimate Threat a Foreign Government Can Pose Toward a Company

question 79

Essay

The ultimate threat a foreign government can pose toward a company is seizing assets. South Korea nationalized Kia, the nation's number three automaker, in the wake of the Asian currency crisis. How does this nationalization differ from expropriation and confiscation?

---

Definitions:

Money Wages

Wages paid to employees in terms of money, as opposed to real wages, which are wages adjusted for inflation.

Real Wages

The purchasing power of wages or income, taking into account the effects of inflation on buying power.

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to estimate inflation.

Economic Rent

The extra income earned by a resource over its opportunity cost.