Exam 7: Foreign Direct Investment

Using any two of the four theories that appear in your text,explain why companies engage in foreign direct investment.

Which of the following is recorded in the capital account of a country's balance of payments?

Which of the following is a major driver of foreign direct investment?

Describe any three management issues involved in foreign direct investment decisions.

Explain the theory of market imperfections and describe the two major market imperfections.

Which of the following accounts within the current account of the United States' balance of payments includes financial gains earned on U.S.assets held abroad?

Which of the following occurs in a country's balance of payments when a country exports more goods and services and receives more income from abroad than it imports and pays abroad?

Trade barriers and specialized knowledge are examples of market imperfections.

The merchandise account includes exports and imports of tangible goods.

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

Which of the following methods is being used when a host country provides lower tax rates and low-interest loans to firms from abroad for encouraging inflows of foreign direct investment?

Tax breaks on profits earned abroad and political pressures are used by ________.

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 subsidiary for component B in Thailand is best described as a(n)________.

A potential problem with a rationalized production model is that a work stoppage in one country can bring the entire production process to a standstill.

Exports and imports of tangible goods are included in the ________ account of a country's balance of payments.

A(n)________ advantage is the one that a company gains from incorporating a business activity within itself rather than leaving it to a relatively inefficient market.

According to the international product life cycle theory,in which stage of a product's life cycle does a company directly invest in production facilities in countries where demand is great enough to warrant production facilities?

________ are those that use outdated and obsolete technologies or employ low-wage workers with few skills.

Firms from emerging markets account for a greater share of global mergers and acquisitions than developed markets.

The requirement that a sufficient portion of a product's content must originate within a certain market to escape tariff charges is an example of a(n)________.