A firm may set up production activities in a foreign country, where tr

QUESTION

A firm may set up production activities in a foreign country, where trade barriers do not currently exist, to reduce the threat of trade barriers being imposed later.

Indicate whether the statement is true or false.

ANSWER

TRUE
Even when trade barriers do not exist, the firm may still want to locate some production activities in a given country to reduce the threat of trade barriers being imposed in the future.