MGT 302 Chapter 8
What are the advantages labeled that are based on utilizing resource endowments or asses to a specific area
Location specific
What are the most common incentives governments offer to foreign firms to invest in their country?
Tax concessions, subsidies, and low-interest loans
Along with the United States, which of the following countries account for 60% of all FDI outflows from 1998 to 2011
United Kingdom, Netherlands, Germany, France, Japan
Which countries have shifted to a more hostile approach to FDI?
Venezuela and Bolivia
With the formation of the ____ in 1995 there now is a multinational institution that has become involved in regulations governing FDI
WTO
FDI should be allowed so long as the _____ outweigh the costs.
benefits
Until the fall of _____ between 1989 and 1991, Eastern European countries were opposed to FDI
communism
FDI has a(n) ____ impact on a host country as studies have shown that significant investments have been made in R&D in those countries by foreign investors
economic
_____ is producing goods at home and shipping them overseas
exporting
Allowing a foreign firm to produce and sell your product for a royalty fee is called ____
licensing
The limits of ____ include giving away valuable know-how to competitors and losing control over marketing, production and strategy
licensing
Greenfield investing spurs competition by increasing the number of players in a market and this will tend to ___ prices and ____ economic welfare.
lower, increase
The situation where multiple firms encounter each other in different regional markets, national markets or industries is called
multi-point competition
The US Department of Commerce states that once a business undertakes foreign direct investment it becomes a(n)
multinational enterprise
The ____ nationalism view contends that FDI has both benefits and costs
pragmatic
As a consequence of ___ effects, the net number of new jobs created by FDI may not be as large initially claimed
substitution
The limits on exporting include:
transportation costs and trade barriers
What are the three potential costs of FDI to host countries?
Adverse effects on balance of payments, perceived loss of national sovereignty and autonomy, and adverse effects on competition
Establishing a new operation in a foreign market and acquiring or merging with a foreign business are examples of
FDI
When a firm invests directly in a foreign market to produce or market a product, this is called
FDI
This view of FDI is based on the classical international trade theory of Smith and Ricardo asserting that international production should be based on comparative advatange
Free Market
What is the name of an investment by a business in new operations in a foreign country?
Greenfield
The theory that explains why firms may prefer exporting to licensing as a means of entering a foreign market
Internalization
What are some advantages of FDI?
It allows for tight control over the firm's operations, it allows the firm to maintain control over technological know-how, it overcomes high transportation costs
What are the three benefits from FDI to a home country?
MNE learns skills from exposure to foreign market, Foreign subsidiary creates demand for home-country exports, Inward flow of foreign earnings
What is the name of an industry that is dominated by a limited number of firms?
Oligopoly
____ of FDI refers to the movement of investment out of a country, and FDI ____ are the flow of investments into a country
Outflows, inflows
Tracking exports and imports of goods and services is measured by the ____ account in balance-of-payments accounting
current account
The only way a country can support a current account deficit, also known as a trade deficit, in the long-run is to
sell off assets to foreigners
Countries can use various trade barriers to impact another country's exports by putting _____ on imports to raise the price and/or establish ___ to control the quantity of goods imported
tariffs, quotas
