International resource movements

Resources that can be moved commonly to a different country are capital, technology and labor. The act of moving capital to another country is the best definition of foreign investment. The transfer of capital can involve establishment of a new organization in another country or the acquisition of shares in already existing organization organizations in foreign countries. There are cases where labor and technology may not be relocated to a different country, but very often, when capital is transferred, at least part of the technology and human resources have to be transferred.

Lot of organizations do not limit themselves to the export of their manufactured products or the sale of intellectual property rights internationally, but additionally, they decide to transfer their production capacity or part of it to another country, because of various prerequisites.

The transfer of resources mainly involves the freedom of movement of capital and people. Some countries willingly allow foreign resources to enter, but there are countries that restrict or prohibit it for various reasons. The transfer of resources has been fragmented since the first international companies appeared in the early 17^th century, when the Netherlands and England, and later other empires of the time, transferred capital, technology and human resources to their colonies. Main impulse for the emergence of modern forms of business process organization was brought about by the Industrial Revolution. However, the greatest acceleration of the transfer of resources to other countries began after the World War II, in the middle of the 20^th century (Jones, 2005). The unrestricted mobility of people and capital is the fundamental principal of post-World War II economic blocs such as the European Union, formally established when the Maastricht Treaty came into force in 1993. From a geopolitical point of view, the transfer of resources is a great motivator for peace. For example, in Europe, France, England, and Germany, they have experienced wars among themselves that weakened the economy for a long time and lot of lives were lost, when laying the foundations of the European Union, sought that if the business people and investors of each country transfer a significant part of their resources to neighboring countries, then the threat of war in the future will be greatly reduced, because the destruction of a country’s property and people would mean the destruction of one’s own country’s capital and human resources. The more the exchange of various resources between the countries, the more sustainable the peace will be. Indeed, the development of the European Union proved this ideology, because since the end of the World War II, there has been no war or more serious conflicts for eighty years, in Western Europe.

The expansion of multinational businesses into foreign markets was clearly seen in the 1960s and 1970s and its spectacular intensification occurred in the 1980s and 1990s (Kalotay, 2020). The promotion of resource transfer is driven by a wide range of geopolitical moves. For example, China under the Communist Party, being technologically and economically lagging behind the world’s leading countries and even the middle ones, although because of the communist ideology it limited the laws of the free market and considered capitalism as an inappropriate model of the country’s governance, China decided to open its borders to the international transfer of resources in the 1970s. The borders were not only opened, but foreigners were encouraged in every way to bring their capital, technology and human resources to China. Because China had a huge supply of labor, at low prices to compare to the level of the capitalist world, it greatly motivated the entrepreneurs of the United States, Germany, France, the United Kingdom and other economically developed countries to transfer their resources to China (Li et al., 2021). China’s requirements and standards for business, such as environmental standards, workers’ rights, and tax policy have greatly enticed businessmen to invest in China, as this has enabled them to earn higher profits, to carry out production cheaper and easier than in their own countries. China made great use of this transfer, mastering technology, significantly upgrading the skills of its labor, and finally, in the 2020s, it surged ahead in terms of its economic size and challenged the leading United States. When talking about the internationalization of the Chinese economy, it is worth mentioning the “Go Global” strategy announced in 2000, enabling the implementation of Chinese foreign investments on a larger scale than before, and the “Belt and Road Initiative” of 2013, opening the way for private Chinese enterprises to enter foreign markets (Mathews, 2006).

In the first decade of the 21^st century, China’s accumulated economic power allowed it to start transferring its resources to other countries of the world – China invested in the critical infrastructures, ports, logistics, energy in Europe, Africa and other continents. Chinese technology companies producing or assembling electronic devices as well as vehicles have caught up with and overtaken many countries of the capitalist world – in North America, Europe, and Asia. The international transfer of resources to China, which began to intensify in the 1970s, became an accelerator of globalization, combining the doctrine of communist authoritarianism in China with the profit-oriented benefits of capitalism and free entrepreneurship. This example is an excellent illustration of how international resource transfers benefit both the countries transferring resources and how countries are motivated to transfer their resources to other countries. As capital, labor, and technology move across national borders, resource transfers partially replace the need for international trade, at least between the countries from which the resources are transferred and to which the resources are transferred.

Ex. 6‑1 Fundamental differences between international resource transfer and export