QUESTION The stock of foreign direct investment refers to: A. the total accumulated value of foreign-owned assets at a given time. B. the number of shares of a foreign firm held by the local investors. C. the amount of FDI undertaken over a given time period (normally a year). D. the dividend amount paid by […]
Date: September 3rd, 2020
QUESTION Offshore production refers to FDI undertaken to serve the host market. Indicate whether the statement is true or false. ANSWER FALSE International trade theory tells us that home-country concerns about the negative economic effects of offshore production may be misplaced. The term offshore production refers to FDI undertaken to serve the home market.
Date: September 3rd, 2020
QUESTION Why has FDI grown more rapidly than world trade? A. The decline in trade barriers has erased the fear of protectionist pressures. B. Executives of business firms see FDI as a way of circumventing future trade barriers. C. There has been a general shift toward radical and totalitarian political institutions. D. Privatization has made […]
Date: September 3rd, 2020
QUESTION Licensing is not a good option if the competitive advantage of a firm is based upon managerial or marketing knowledge that is embedded in the routines of the firm or the skills of its managers, and that is difficult to codify in a “book of blueprints Indicate whether the statement is true or false. […]
Date: September 3rd, 2020
QUESTION The location-specific advantages argument associated with John Dunning helps explain why firms prefer FDI to licensing or to exporting. Indicate whether the statement is true or false. ANSWER FALSE The implications of the theories of FDI for business practice are straightforward. First, the location-specific advantages argument associated with John Dunning does help explain […]
Date: September 3rd, 2020
QUESTION The WTO embraces the promotion of international trade in services. Indicate whether the statement is true or false. ANSWER TRUE The WTO embraces the promotion of international trade in services. Because many services have to be produced where they are sold, exporting is not an option. Given this, the WTO has become involved […]
Date: September 3rd, 2020
QUESTION Performance requirements are controls over the behavior of the MNE’s local subsidiary. Indicate whether the statement is true or false. ANSWER TRUE Performance requirements can also take several forms. Performance requirements are controls over the behavior of the MNE’s local subsidiary. The most common performance requirements are related to local content, exports, technology […]
Date: September 3rd, 2020
QUESTION Ownership restraints and performance requirements are the two most common ways in which host governments restrict FDI. Indicate whether the statement is true or false. ANSWER TRUE Host governments use a wide range of controls to restrict FDI in one way or another. The two most common are ownership restraints and performance requirements.
Date: September 3rd, 2020
QUESTION By limiting imports through quotas, governments reduce the attractiveness of FDI and licensing. Indicate whether the statement is true or false. ANSWER FALSE By limiting imports through quotas, governments increase the attractiveness of FDI and licensing. For example, the wave of FDI by Japanese auto companies in the United States during the 1980s […]
Date: September 3rd, 2020
QUESTION According to the free market view, countries should specialize in the production of those goods and services that they can produce most efficiently. Indicate whether the statement is true or false. ANSWER TRUE The free market view argues that international production should be distributed among countries according to the theory of comparative advantage. […]
Date: September 3rd, 2020
