Foreign Direct Investment Overview

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What does FDI stand for?

Foreign Direct Investment

What does positive net flow indicate in the context of FDI?

Domestic companies invest more abroad than foreign investors in the country

What is the main characteristic of Horizontal FDI?

Expanding domestic operations to a foreign country

What does Inward FDI measure?

<p>Investments made by foreign companies in the domestic economy</p> Signup and view all the answers

What is one of the key functions of FDI according to the text?

<p>Facilitating technology transfer between countries</p> Signup and view all the answers

Which statement accurately describes Outward FDI?

<p>Measures investments made by domestic companies in a foreign economy</p> Signup and view all the answers

What type of FDI is McDonald's opening restaurants in Japan?

<p>Horizontal FDI</p> Signup and view all the answers

If McDonald's were to purchase a large-scale farm in Canada to produce meat for their restaurants, what type of FDI would this be?

<p>Vertical FDI</p> Signup and view all the answers

Which of the following is NOT a motive for foreign direct investment?

<p>Profit maximization</p> Signup and view all the answers

What is a benefit of FDI for the host country?

<p>Development of human capital</p> Signup and view all the answers

What is a disadvantage of FDI for the host country?

<p>Displacement of local businesses</p> Signup and view all the answers

What is the main difference between foreign direct investment (FDI) and foreign portfolio investment (FPI)?

<p>FDI offers the investor control over the business entity, while FPI does not</p> Signup and view all the answers

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