Anna Stalinskaya, Ph.D., School of Economics, College of Economics, Management and Information Systems, University of Nizwa, P.O.Box 33 P.C., Nizwa, Sultanate of Oman, Nizwa, 616, Oman
Multinational Corporations (MNC) in their activities face many risks associated with regional or global reach of operations. The uncertainty falls however when economic integration removes barriers for trade, investment and labor flows. The final phase of this process is a full monetary integration. This stage removes entirely exchange rate risk for intra-union activities. It may also decrease the volatility of a common currency exchange rate due to a higher economic stability. This is a significant change in the economic environment in which MNCs operate and has a great potential of influencing internal risk management solutions implemented prior to monetary integration. The paper investigates potential areas in MNC’s organization, management and activities that are affected by monetary integration. The aim is to recognize the nature and magnitude of adjustments needed when a group of countries, in which MNC operate, give up national monetary policies for a common one, lock irreversibly bilateral exchange rates and allow for a free intra-union capital flows.
Data used will be from national statistical offices, governmental agencies and MNCs. Some of the data that refer to macro-level will be from the International Financial Statistics database.
Methods utilized cover simple firm (MNC) behavior modeling in a monetary union from global and regional perspective (the distinction refers to choices about wages, production volume, investment and pricing of products).
The expected results of the research are as follows: 1) to reveal the difference between regional and global MNCs when a regional monetary integration takes place, 2) to recognize what potential costs and benefits monetary integration induces for both categories of MNCs. These changes to regional and global MNCs are expected to be associated with nature of their operations, market position and market structure they operate on.
JEL Classification: E42, D21
Keywords: monetary integration, economic modeling, MNC.