Exam 7: Foreign Direct Investment

If the cost of land and the tax rate on profits are lower in the local market, one can assume they will remain constant.

The globalization of innovation and the phenomenon of foreign direct investment in research and development activities are motivated purely by demand factors such as the size of local markets.

Which of the following is the extension of company activities into stages of production that provide a firm's inputs or absorb its outputs?

A market that is said to operate at peak efficiency and where goods are readily and easily available is said to be a perfect market.

The destination of most foreign direct investment inflows is ________ countries.

A greenfield investment is ________.

When a country imports more goods and services and pays more abroad than it exports and receives from abroad, a(n) ________ occurs.

All of the following are benefits of acquisitions EXCEPT the ________.

Scenario: Happyland Happyland, a country of about 48 million people with beautiful beaches, vast natural resources, and a highly skilled labor force, is encouraging foreign direct investment flows. The country has been exporting textiles, computer hardware, and software. The net result of trade is that Happyland exports far more goods and services and receives more income from abroad than it imports and pays abroad. -Looking at Happyland's international trade situation, the country is experiencing a ________.

Factors of production include things such as labor, financial capital, capital equipment, and land or natural resources.

Industrialized countries are the source for about 35 percent of worldwide foreign direct investment.

Trade barriers and specialized knowledge are both examples of market imperfections.

The two main drivers of foreign direct investment flows are ________ and ________.

The ________ is a national account that records transactions involving the import and export of goods and services, income receipts on assets abroad, and income payments on foreign assets inside the country.

Which of these theories states that firms undertake foreign direct investment when the features of a particular location combine with ownership and internalization advantages to make a location appealing for investment?

Because foreign direct investment inflows are recorded as subtractions to the balance of payments, a nation is negatively affected from an initial foreign direct investment inflow.

Developed countries are the prime destination for foreign direct investment because cross-border mergers and acquisitions are concentrated in developed countries.

A home country may encourage outward foreign direct investment because it ________.

A market imperfection that can encourage foreign direct investment is the possibility that a company will create a future competitor by charging another company for access to its knowledge.

Portfolio investment is the purchase of physical assets or a significant amount of ownership of a company in another country to gain a degree of management control.