Exam 7: Foreign Direct Investment

What two factors propel growth in foreign direct investment?

According to the market imperfections theory,competition is a common market imperfection.

Which of the following is used by home-country governments to promote outbound foreign direct investment?

Partnerships between a government and a host company in the context of foreign direct investment lead to ________.

Rationalized production is a system of production in which each of a product's components is produced in the same location so that the cost of producing that product is lowest.

A home country encourages outflows of foreign direct investment because it ________.

In the ________ product stage of the international product life cycle theory,increased competition pressurizes a company to build production facilities in low-cost developing nations.

The realization that companies can start production in the most efficient and productive locations in the world and export to markets worldwide led to a new surge of foreign direct investment into ________.

Making investments in distribution in order to leapfrog channels of distribution that are tightly controlled by competitors is an example of ________.

Scenario: Global Manufacturing Inc.(GMI) Global Manufacturing Inc.,a fast-growing U.S.company,plans for a production system in which two components of its product will be manufactured in locations where the cost of production is lowest.The components will then be taken to maquiladoras for final assembly.GMI plans to purchase an existing company in Brazil to produce component A and build a subsidiary in Thailand to produce component B. -GMI's investments are examples of ________.

Scenario: Blickinstock at the Crossroads Auto parts supplier,Blickinstock Ltd.,would like to expand its presence in Latin America.To that end,Blickinstock is trying to decide whether to purchase an existing company in a remote region of Argentina or build its own subsidiary.Keith Moon,Blickinstock's vice president of global business development,will be making a presentation to the board outlining the company's options. -If board members ask about the maquiladora industry,Keith would explain that it refers to ________.

________ 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(n)________ market.

The difference between the balances of the current and capital accounts of a country's balance of payments caused by errors in recording methods is called a(n)________.

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

Scenario: Happyland Happyland is a country characterized by beautiful beaches,vast natural resources,and a highly skilled labor force.Happyland is now encouraging foreign direct investment flows.The country has been exporting textiles,computer hardware,and software programs.The net result of the trade is that Happyland exports far more goods and services and receives more income from abroad than it imports and pays abroad. -If Happyland is successful in attracting foreign direct investment,transactions involving those investments would appear in the country's ________ account.

Scenario: Blickinstock at the Crossroads Auto parts supplier,Blickinstock Ltd.,would like to expand its presence in Latin America.To that end,Blickinstock is trying to decide whether to purchase an existing company in a remote region of Argentina or build its own subsidiary.Keith Moon,Blickinstock's vice president of global business development,will be making a presentation to the board outlining the company's options. -Blickinstock has identified a company that it can acquire or merge with.Which of the following statements would represent the least likely reason for Blickinstock to go ahead with the merger?

Explain the various methods that host countries use to restrict and promote foreign direct investment.

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

Not all factors of production are internationally mobile.