Abstract<br/>Foreign Direct Investment has been pursued to economically integrate countries and to increase economic development. This has been accomplished partly through the WTO and Free Trade Agreements (FTAs), which have spurred foreign direct investment (FDI) by removing barriers to trade tariff and nontariff. In addition, they also created a framework and legal guidelines and regulations for investment and trade. Research suggests that this is the case when looking at country level data before and after FTAs go into effect. Although the existing literature offers important insights a weakness is it does not often look at the relationship between FTAs and FDI by analyzing firm level data. This is an important relationship to be studied as, beyond governments multinational companies (MNCs) are one of few key actors that can benefit the most and have the capabilities to take advantage of these FTAs. Therefore, studying the relationship between MNCs and their investments both before and after an FTA is signed is important to see if FDI would change in response to Free Trade Agreements and have an impact at the MNC level deployment of FDI. This would be significant to see if the current steady for attracting FDI is working. This is also important as FDI helps countries develop. Therefore, it can be seen as an exceptional contribution to the overall research on the subject. In this paper I will explore how companies have reacted to the formation of FTAs as well as the distinct effects of North-South South-South and North-North Agreements on firm’s investment strategies, using firm level data and drawing on interviews with multiple trade officials.

There is a theory in management that was taught to me when I first arrived at Arizona State. In my first TGM 101 class, I was told that the world was becoming smaller, and countries were becoming more and more interconnected. Generally speaking, this is true. We have seen unprecedented economic and technological growth on a scale never before seen in human history. Global supply chains, the internet; these new systems are changing the way the world works. Their greatest ambition was, in a sort-of perfect globalist view, the dissolution of borders (or at least, trade barriers) and increased interconnectivity. There was a classic idea that trade would bring new markets and provide opportunities to grow. There is a fundamental flaw with this theory: it fails to acknowledge our past.
We cannot ignore factors of religion, politics, and culture. There is a rise in political populism: Donald Trump’s “Make America Great Again” campaign, Brexit, a rise in Russian and Chinese nationalism, just to name a few. New global players want to establish themselves as leaders, through technology and territorial growth. The purpose of my research is to analyze China’s growth in the automotive sector, identify trade issues with respect to this industry between the United States and China, and to encourage others to re-evaluate our position in a global, interconnected economy. A global economy that is too dependent on a single, state-funded production hub is a vulnerable one. The main issues are in China’s unfair trade practices, including currency manipulation, Chinese import dumping, poor working conditions, safety standards violations, and nationalized or government owned businesses.

‘Institutional voids’ is a concept used to describe institutional effectiveness in developing economies. Namely as they relate to business environments and the market gaps the produce. Initially meant to describe how developing countries tend to lack effective institutional mechanisms such as adequate contract-enforcement that are commonplace in the West. However, since their introduction to academic literature in 1997, (Khanna & Palepeu, 1997) the scope of the idea has been expanded to describe problems such as a general absence of law enforcement and limited government support for social programs.
The primary question this thesis seeks to resolve is whether institutional voids have any practical use informing managers about business environments in the Global South. The hypothesis is that the concept is now so diffuse that it has become effectively meaningless and that managers in the real world use more sophisticated methods of assessing potential host countries. The telecommunications industry is particularly vulnerable to the institutional capabilities of host governments is because of its reliance on the host government to provide effective capital markets and appropriate legal mechanisms needed for investment in infrastructure and technology. For this reason, this research will focus on what role, if any, Institutional Voids play in corporate decision making.
After performing a comparative case analysis, the researcher found that after examining the cases the outcomes diverged from what the institutional voids hypothesis would have suggested, suggesting that the hypothesis is insufficient at predicting outcomes. Researcher then suggests using statistically proven models from development research to better analyze government capacity across countries.