Exam 7: Foreign Direct Investment

There has been a rapid decrease in the total volume of FDI over the past 20 years.

What is meant by the term Foreign Direct Investment? Describe the difference between the flow of foreign direct investment and the stock of foreign direct investment.

Firms undertake FDI at _____________ is Raymond Vernon's view of foreign direct investment.

If Siemens, a German firms, purchased a 20% interest in a manufacturing firm in Canada, Siemens would be engaging in

Radical writers believe that _____________ extract profits from the host country and take them to their home country, giving nothing of value to the host country in exchange.

McDonalds has expanded into foreign markets primarily through

Granting a foreign entity the right to produce and sell the firm's product in return for a royalty fee on every unit the foreign entity sells is called FDI.

Historically, most FDI has been directed at ______________?

The eclectic paradigm has come under sharp criticism by British economist John Dunning.

A traditional criticism among Canadian nationalists of inward FDI is that we will become a branch plant economy.Branch plants are a foreign subsidiary of a multinational parent corporation.Branch plants, usually of United States corporations, are common in the Canada.Canadian nationalists claim that they have helped to obstruct the growth of a Canadian economy that is independent of other countries interests and self-directed.However, some Canadian economists argue that they are been an important factor in stimulating our economy and supporting our standard of living.What is your position? Explain.

The eclectic paradigm is a theory of FDI that combines two other perspectives into a single holistic explanation of FDI.

Silicon Valley has a ______________ in the generation of knowledge related to the computer and semi-conductor industries, when looked at by Dunning's theory.

Which of the following involves granting a foreign entity the right to produce and sell the firm's product in return for a royalty fee on every unit sold?

Thirty years ago, Starbucks was a single store.Today, it is a global roaster and retailer of coffee with more than 875 stores located in Japan.

According to the textbook, FDI is expensive because

Because of the problems associated with doing business in a different culture where the "rules of the game" may be very different, FDI is risky.

Regarding the costs of FDI for the home country, the most important concerns center around:

Much foreign direct investment is undertaken as a response to actual or threatened

When ________________, a firm will favor FDI over exporting as an entry strategy, according to the textbook.

Although it normally involves much longer-term commitments, franchising is essentially the service industry version of: