TITLE : ECONOMIC ENVIRONMENT OF INTERNATIONAL BUSINESS, THE. 4TH ED.

This is the fourth edition of a book that is intended to introduce the reader to a manager's perspective in the fields of international payments, international trade, and international investment.

The international economic environment, as the reader hardly needs to be told, has changed profoundly over the past ten years. Old institutions have been swept away; old assumptions have been altered. We were determined to try to capture some of the dimensions of that shift in the present edition.

Another factor of importance has shaped this edition. In the past decade or two, scholars at Harvard and other institutions have done exhaustive studies of the operations of the multinational enterprise, or multinational corporation, or transnational enterprise. In that period of intensive study, a stream of materials and concepts has emerged that illuminates the strategies, structures, practices, and effects of such enterprises. This edition tries to capture these con- cepts in textbook form.

Although we have borrovved frequently from the concepts of economic theory, this book is different in both purpose and content from a stan- dard textbook in international economics. Such texts must discharge an obligation that this book has not assumed; here we must face some issues that standard texts can quite properly disregard.

Any discipline such as economics is concerned with the development of a system of mutually consistent and interrelated principles that, in the aggregate, "explain" a field. A textbook in a given discipline has the task of presenting the principles that make up the discipline. However, many of the propositions that are indispensable to fill out the rational structure of the discipline have no obvious relevance for understanding the international environment or for analyzing the problems encountered in it. Accordingly, we have chosen the uninhibited course of presenting principles and concepts from the economic t discipline (and other disciplines, for that matter) when we thought the ideas 1 useful, while disregarding the contributions of the disciplines when we thought | them irrelevant in this context. For instance, our use of trade theory and l monetary theory in the explanation of international economic behavior is bal- 1 anced quite differently from the presentation in standard textbooks.

Of course, many of the problems in the international economy can derive little help from the familiar precepts of the disciplines. As a rule, the problems encountered in the international economy are shrouded in uncertainty and risk, and the disciplines are still in their infancy in the development of propositions in which uncertainty and risk are involved. At other times, as in the case of problems involving foreign exchange risk, the coupling of propositions from various disciplines, such as economics and political science, is required in ways that may not be satisfying to either. Accordingly, we have not hesitated to stray beyond the solid structure of the disciplines whenever we thought that something systematic might usefully be said bearing on the prob- lems of enterprises in the international economy.

Most textbooks come very close to being stolen intellectual goods. Proper acknowledgments for the contributions that go into the makings of a textbook, therefore, present a real problem for any author. The situation could hardly be otherwise. The job of a textbook is largely to present the current state of the art. Few scholars individually can do much more than add a few insights, a few clarifications, to a body of ideas already formulated by the culture that spawned them. Inevitably that is the character of this book.

A word on authorship. This edition, as the names on the cover at- test, is the work of two authors. The general strategy and content of the pres- ent edition represented a joint effort of the authors. Wells was principally responsible for Chapters 3, 5, 6, 7, and 12, while Vernon was principally responsible for the rest. Ya-Shung Huang performed admirably as research assistant in the development of this edition. Andree Brown and Valerie Grasso, exploiting word processors to their limits, helped us meet difficult deadlines.