Exam 7: Foreign Direct Investment

Which groups of nations are the main sources and destinations of foreign direct investment?

Today, all factors of production are internationally mobile.

A country's ________ is a national accounting system that records all payments to entities in other countries and all receipts coming into the nation.

Discuss the market power theory and explain how a company can achieve market power.

Two main reasons for foreign direct investment flows are globalization and diversity.

A nation's balance of payments consists of two components called the ________ account and the ________ account.

A potential problem with rationalized production is that ________.

Which of these refers to the theory that a company will begin by exporting its products and later undertake foreign direct investment as a product moves through its life cycle?

In the ________ stage of the international product life cycle, increased competition creates pressures to reduce production costs.

Investment by multinational companies benefits developing and newly industrialized countries in all the following ways EXCEPT ________.

Vertical integration is the extension of company activities into stages of production that provide a firm's inputs (forward integration) or absorbs its outputs (backward integration).

To limit the effects of outbound foreign direct investment on the national economy, home governments may impose differential tax rates that charge earnings from abroad at a higher rate than domestic earnings.

The soaring cost of developing subsequent stages of technology has led multinationals to engage in cross-border alliances and acquisitions.

Home governments may use which of the following to limit the effects of outbound foreign direct investment?

Identify why a home country might support or discourage outgoing foreign direct investment.

The eclectic theory states that a company will begin by exporting its products and later undertake foreign direct investment as a product moves through its life cycle.

The ________ theory 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.

In industries with a limited number of large firms, foreign direct investment decisions frequently resemble a "follow the leader" scenario.

The ________ is a national account that records transactions involving the purchase or sale of assets.

Which of the following are main drivers of foreign direct investment?