Exam 7: Foreign Direct Investment

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?

The purchase of physical assets or a significant amount of ownership of a company in another country to gain a measure of management control is called ________.

The income payments account includes income earned on home country assets held abroad.

According to the eclectic theory that explains FDI,an internalization advantage is the advantage of locating a particular economic activity in a specific location because of the characteristics of that location.

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. -Happyland's international trade situation illustrates that the country is experiencing a ________.

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.

Discuss why a host country might promote or restrict foreign direct investment.

Which of the following methods is used by a host country to restrict incoming foreign direct investment?

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

Home nations discourage foreign direct investment outflows because it ________.

Why is it important to assess R&D costs when considering FDI? Given its costs,how can FDI benefit the host country with access to technology,management skills,and employment?

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

The ________ theory states that when an aspect of 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 efficiency-reducing aspect.

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

________ is an investment that does not involve obtaining a degree of control in a company.

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.

When a U.S.subsidiary in another country remits profits back to its parent company in the U.S. ,the receipt of profits is recorded in the ________.

Performance demands made by host countries to restrict incoming FDI apply exclusively to businesses in cultural industries.

Discuss the role entrepreneurs and small businesses play in the expansion of FDI.What are some of the surprises that managers face as they invest in new markets abroad?

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)________.