Zamsalsky is a newly independent country that has taken the name theDemocratic People's Republic of Zamsalsky(DPRZ). There are 50 identifiable ethnolinguistic groups in the DPRZ, each with its own language, culture, and customs. Each group occupies a specific geographic region of the country. To facilitate national unity and enhance economic development, the new country has chosenPortugueseas its national and official language DPRZ used to be a Portuguese colony. Other important languages include Arabic, Balante, and Malinke. The country's new president is Dr. Beatriz Wnia Toms, a member of the Balante ethnolinguistic group. The Prime Minister is Professor Agueda Teixeira who is a member of the Malinke ethnolinguistic group.

The DPRZ has a population of 65 million people, with the Balante (18 million) and Malinke (16 million) being the largest and most dominant ethnocultural groups. With a gross national income (GNI) per capita of only U.S. $170.00 (PPP) and an HDI of 0.245, the DPRZ is considered by the international development community as one of the poorest countries in the world. More than 85% of the people of the DPRZ live in rural areas and are engaged in subsistence agriculture. The country has virtually no industries and more than 90% of its population lives under the poverty line. The country's capital city is Quezon (pop. = 250,000).

Three years ago, President Toms, a graduate of Stanford University, was invited by the Association of Portuguese students at Stanford to participate in a series of events commemorating theCommunity of Portuguese Language Countries Week. While in California, Dr. Toms was invited to meet with several business executives who were interested in exploring investment opportunities in the DPRZ. After the meetings, two California-based firms, Quinton Engineering, Inc. (QEI) and Miguel ngel Computer Systems (MACS), indicated an interest to build and operate manufacturing plants in the DPRZ. QEI is a multinational company with manufacturing plants in 65 countries and produces specialized software for use in healthcare and schools, including universities and research institutions. Most of its executives are fluent in multiple languagesEnglish, Spanish, Portuguese, Chinese, and Arabic. MACS is a multinational company with headquarters in San Jose and subsidiaries in 47 countries. It specializes in the production of microchips for automobiles, household appliances, including refrigerators, farm equipment (e.g., harvesters and tractors), vending machines, and most importantly casino slot machines. Most of MACS' executives are fluent in English, French, Arabic, Chinese, Korean, and German. Both MACS and QEI are also major suppliers to the armed forces of the United States.

Since the DPRZ is located in the African continent, the two companies hope that their investments in the DPRZ will allow them to significantly reduce the costs of selling their products to Africa and the Middle East. Presently, all demands for products from either the MACS or QEI are met from their plants in Belgium and France respectively. These companies believe that establishing subsidiaries in the DPRZ will allow them to more efficiently serve their customers in the Middle East and Africa.

MACS plans an initial investment of $5 billion in the DPRZ. QEI plans an initial investment of $6.5 billion in the DPRZ. Although these companies see the DPRZ as an excellent location to help them service their Middle East and African customers, they have some concerns, virtually all of which have to do with coordination. For example, both companies are not sure if they will be able to find enough engineers in the DPRZ to work for them. Their experiences have proved to them that it is more efficient to hire domestic engineers than import them from other countries. Hence, MACS and QEI do not plan to import engineers from other countries.

Prime Minister Teixeira, whose office is in charge of foreign direct investment (FDI), has hired you to advise her on what to do regarding how to convince these two companies that the DPRZ is an excellent location for their African subsidiaries and that they need not be worried about any coordination issues.

Frame your answer using the following outline, noting that there are three economic agents involved:MACS;QEI;prospective engineers, and theGovernment of the DPRZ.

1. The companiesQEI & MACS: Discuss the coordination issues that these companies are likely to face if they decide to invest in the DPRZ and proffer solutions to them.
2. Prospective engineers: Examine the coordination problems that students planning to invest in the study of engineering will face and suggest solutions to these problems.
3. Government of the Democratic People's Republic of Zamsalsky (DPRZ). Does the DPRZ have a role to play in resolving the coordination problems faced by the three economic actors mentioned in (1) and (2) above? If yes, explain.