Exam 7: Foreign Direct Investment

Forces causing globalization are part of the reason for long-term growth in foreign direct investment.

The ________ account within the current account includes exports and imports of tangible goods.

Companies seek cross-border mergers and acquisitions to ________.

A company that integrates backward or forward can achieve market power through ________.

Reasons for home nations to discourage foreign direct investment outflows include all of the following EXCEPT that it may ________.

Africa attracts about 3 percent of worldwide foreign direct investment inflows.

Exports and imports of tangible goods are included in the ________ account within the current account.

Building a subsidiary abroad from the ground up is called a(n) ________.

If coffee company Maxwell House were to acquire a coffee plantation in Brazil, it might achieve market power through vertical integration.

Which of the following is NOT one of the four main theories that attempts to explain why companies engage in foreign direct investment?

When a country provides tax breaks and low-interest loans, it is using which of these to encourage inflows of foreign direct investment?

The advantage of locating a particular economic activity in a specific location because of the characteristics of that location is called a(n) ________.

Why might a host country promote or restrict foreign direct investment?

Which of these created renewed determination to further reduce barriers to trade?

Scenario: Global Manufacturing, Inc. (GMI) GMI is a fast-growing U.S. company that wants a production system that makes each of its product's two components in the location where the cost of production is lowest. The components will then be taken to maquiladoras for final assembly. GMI purchased an existing company in Brazil to produce component A and built a subsidiary in Thailand to produce component B. -GMI's production system can best be described as ________.

When a country imports more goods and services and pays more abroad than it exports and receives from abroad, it experiences a current account deficit.

A system of production in which each of a product's components is produced in the location where the cost of producing the component is lowest is called ________.

The ________ theory states that when an imperfection in the market makes a transaction less efficient than it could be, a company will undertake foreign direct investment to internalize the transaction and thereby remove the imperfection.

In the ________ stage of the international product life cycle, a company directly invests in production facilities in countries where demand is great enough to warrant its own production facilities.

One method used by host countries to restrict incoming foreign direct investment is ownership restrictions.