Question 1

Describe some of the home country policies that encourage outward FDI.

Accepted Answer

Many investor nations now have government-backed insurance programs to cover major types of foreign investment risk.The types of risks insurable through these programs include the risks of expropriation,war losses,and the inability to transfer profits back home.
In addition,several advanced countries also have special funds or banks that make government loans to firms wishing to invest in developing countries.As a further incentive to encourage domestic firms to undertake FDI,many countries have eliminated double taxation of foreign income.Last,and perhaps most significant,a number of investor countries (including the United States)have used their political influence to persuade host countries to relax their restrictions on inbound FDI.

Question 2

The majority of cross-border investment in the developed world is in the form of greenfield investments rather than mergers and acquisitions.

Accepted Answer

A) True 
 B)False  False

Question 3

Internalization theory seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.

Accepted Answer

A) True 
 B)False  True

Question 4

The _____ of FDI refers to the amount of FDI undertaken over a year.

Accepted Answer

A)  stock 
B)  net value 
C)  accumulated value 
D)  flow 
A)  stock 
B)  net value 
C)  accumulated value 
D)  flow

Question 5

Direct effects of FDI arise when jobs are created in local suppliers as a result of the FDI and when jobs are created because of increased local spending by employees of the MNE.

Accepted Answer

A) True 
 B)False

Question 6

_____ is essentially the service-industry version of licensing,although it normally involves much longer term commitments.

Accepted Answer

A)  Franchising 
B)  Subsidizing 
C)  Greenfield investment 
D)  Patenting 
A)  Franchising 
B)  Subsidizing 
C)  Greenfield investment 
D)  Patenting

Question 7

Discuss the benefits and costs of FDI from the perspective of a host country and from the perspective of the home country.

Accepted Answer

The main benefits of inward FDI for a ho

Question 8

Host country citizens that are employed by an MNE following an FDI are an example of an indirect effect of FDI.

Accepted Answer

A) True 
 B)False

Question 9

A country rejects FDI proposals in certain industries.It does so because the tangible advantages of such investments are lesser than potential costs like loss of employment and reduction of overall well-being.However,it aggressively pursues inviting foreign investments in sectors like infrastructure,education,and healthcare because of the benefits that accrue with them.Which political view of FDI is discussed in this example?

Accepted Answer

A)  The pure market view 
B)  The free market view 
C)  The radical view 
D)  The pragmatic nationalist view 
A)  The pure market view 
B)  The free market view 
C)  The radical view 
D)  The pragmatic nationalist view

Question 10

Research supports the view that multinational firms often transfer significant technology when they invest in a foreign country.

Accepted Answer

A) True 
 B)False

Question 11

In practice only a few countries country have adopted the free market view in its pure form.

Accepted Answer

A) True 
 B)False

Question 12

The pragmatic nationalist view highlights only the benefits of FDI.

Accepted Answer

A) True 
 B)False

Question 13

What is an oligopoly? Discuss the impact of interdependence in an oligopoly.

Accepted Answer

An oligopoly is an industry composed of

Question 14

According to the _____ view of FDI,MNEs extract profits from the host country and take them to their home country,giving nothing of value to the host country in exchange.

Accepted Answer

A)  imperialist 
B)  conservative 
C)  free market 
D)  radical 
A)  imperialist 
B)  conservative 
C)  free market 
D)  radical

Question 15

A French wind power company gives an Indonesian company the right to produce and sell wind turbines in return for a royalty fee on every unit sold.Which business practice is this an example of?

Accepted Answer

A)  Acquisition 
B)  Licensing 
C)  Exporting 
D)  Greenfield investment 
A)  Acquisition 
B)  Licensing 
C)  Exporting 
D)  Greenfield investment

Question 16

Which of the following is a home-country policy aimed at limiting outward FDI flow?

Accepted Answer

A)  Taxing domestic companies' foreign earnings at a higher rate than their domestic earnings 
B)  Implementation of government-backed insurance programs to cover major types of foreign investment risk 
C)  Eliminating double taxation of foreign income 
D)  Persuading host countries to relax their restrictions on inbound FDI 
A)  Taxing domestic companies' foreign earnings at a higher rate than their domestic earnings 
B)  Implementation of government-backed insurance programs to cover major types of foreign investment risk 
C)  Eliminating double taxation of foreign income 
D)  Persuading host countries to relax their restrictions on inbound FDI

Question 17

In which way can the source country's balance of payments benefit from an FDI made in a foreign country?

Accepted Answer

A)  From cash outflow during the initial investment to finance the FDI 
B)  If the purpose of the foreign investment is to serve the home market from a low-cost production location 
C)  From the inward flow of foreign earnings 
D)  If FDI is a substitute for direct exports 
A)  From cash outflow during the initial investment to finance the FDI 
B)  If the purpose of the foreign investment is to serve the home market from a low-cost production location 
C)  From the inward flow of foreign earnings 
D)  If FDI is a substitute for direct exports

Question 18

Why is it said that not all the new jobs created by FDI represent net additions in employment?

Accepted Answer

A)  Because of the uncertainty of the overall economic environment 
B)  Because most of the job creation is indirect in nature 
C)  Because jobs created by an investment may be offset by the jobs lost in domestic companies 
D)  Because the unemployment rate more or less remains constant over the short-term 
A)  Because of the uncertainty of the overall economic environment 
B)  Because most of the job creation is indirect in nature 
C)  Because jobs created by an investment may be offset by the jobs lost in domestic companies 
D)  Because the unemployment rate more or less remains constant over the short-term

Question 19

Which of the following primarily explains why developing nations are characterized by lower percentage of cross-border mergers and acquisitions compared to developed nations?

Accepted Answer

A)  Fewer target firms to acquire in developing nations 
B)  Fierce opposition to mergers and acquisitions in developed nations 
C)  Unwillingness of foreign companies to invest in developing nations 
D)  Presence of import quotas in developing nations 
A)  Fewer target firms to acquire in developing nations 
B)  Fierce opposition to mergers and acquisitions in developed nations 
C)  Unwillingness of foreign companies to invest in developing nations 
D)  Presence of import quotas in developing nations

Question 20

When a company brings capital and/or technology to a host country,the host country benefits from the:

Accepted Answer

A)  political effect of FDI. 
B)  resource-transfer effect of FDI. 
C)  balance-of-payments effect of FDI. 
D)  bandwagon effect of FDI. 
A)  political effect of FDI. 
B)  resource-transfer effect of FDI. 
C)  balance-of-payments effect of FDI. 
D)  bandwagon effect of FDI.

Describe some of the home country policies that encourage outward FDI.

The majority of cross-border investment in the developed world is in the form of greenfield investments rather than mergers and acquisitions.

Internalization theory seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.

The _____ of FDI refers to the amount of FDI undertaken over a year.

Direct effects of FDI arise when jobs are created in local suppliers as a result of the FDI and when jobs are created because of increased local spending by employees of the MNE.

_____ is essentially the service-industry version of licensing,although it normally involves much longer term commitments.

Discuss the benefits and costs of FDI from the perspective of a host country and from the perspective of the home country.

Host country citizens that are employed by an MNE following an FDI are an example of an indirect effect of FDI.

Research supports the view that multinational firms often transfer significant technology when they invest in a foreign country.

In practice only a few countries country have adopted the free market view in its pure form.

The pragmatic nationalist view highlights only the benefits of FDI.

What is an oligopoly? Discuss the impact of interdependence in an oligopoly.

According to the _____ view of FDI,MNEs extract profits from the host country and take them to their home country,giving nothing of value to the host country in exchange.

A French wind power company gives an Indonesian company the right to produce and sell wind turbines in return for a royalty fee on every unit sold.Which business practice is this an example of?

Which of the following is a home-country policy aimed at limiting outward FDI flow?

In which way can the source country's balance of payments benefit from an FDI made in a foreign country?

Why is it said that not all the new jobs created by FDI represent net additions in employment?

Which of the following primarily explains why developing nations are characterized by lower percentage of cross-border mergers and acquisitions compared to developed nations?

When a company brings capital and/or technology to a host country,the host country benefits from the:

Globalization

National Differences in Political Economy, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Regional Trade Pacts Give the Mexican Auto Industry an Edge

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and Rd

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 8: Foreign Direct Investment

Describe some of the home country policies that encourage outward FDI.

The majority of cross-border investment in the developed world is in the form of greenfield investments rather than mergers and acquisitions.

Internalization theory seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.

The _____ of FDI refers to the amount of FDI undertaken over a year.

Direct effects of FDI arise when jobs are created in local suppliers as a result of the FDI and when jobs are created because of increased local spending by employees of the MNE.

_____ is essentially the service-industry version of licensing,although it normally involves much longer term commitments.

Discuss the benefits and costs of FDI from the perspective of a host country and from the perspective of the home country.

Host country citizens that are employed by an MNE following an FDI are an example of an indirect effect of FDI.

Research supports the view that multinational firms often transfer significant technology when they invest in a foreign country.

In practice only a few countries country have adopted the free market view in its pure form.

The pragmatic nationalist view highlights only the benefits of FDI.

What is an oligopoly? Discuss the impact of interdependence in an oligopoly.

According to the _____ view of FDI,MNEs extract profits from the host country and take them to their home country,giving nothing of value to the host country in exchange.

A French wind power company gives an Indonesian company the right to produce and sell wind turbines in return for a royalty fee on every unit sold.Which business practice is this an example of?

Which of the following is a home-country policy aimed at limiting outward FDI flow?

In which way can the source country's balance of payments benefit from an FDI made in a foreign country?

Why is it said that not all the new jobs created by FDI represent net additions in employment?

Which of the following primarily explains why developing nations are characterized by lower percentage of cross-border mergers and acquisitions compared to developed nations?

When a company brings capital and/or technology to a host country,the host country benefits from the:

Globalization

National Differences in Political Economy, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Regional Trade Pacts Give the Mexican Auto Industry an Edge

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and Rd

Global Human Resource Management

Accounting and Finance in the International Business

Filters