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Exam 7: Foreign Direct Investment

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Question 31

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Besides the United States,the other important source country for FDI today is _____.

A) China
B) Spain
C) Greece
D) India
E) Japan

F) C) and D)
G) B) and E)

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Question 32

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The flow of foreign investment refers to the number of countries a firm is investing in at any given point in time.

A) True
B) False

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Question 33

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In practice,many countries have adopted neither a radical policy nor a free market policy toward FDI,but instead a policy that can best be described as pragmatic nationalism.

Which of the following involves granting a foreign entity the right to produce and sell the firm's product in return for a royalty fee on every unit sold?

The _____________ of foreign direct investment refers to the amount of FDI undertaken over a given period (normally a year) .The _____________ of foreign direct investment refers to the total accumulated value of foreign-owned assets at any time.

For the most part Canadian FDI outflow in last few years went to ________________.

According to the textbook,a firm will favor _____________ over _______________ when it wishes to maintain control over its technological know-how,or over its operations and business strategy.

Control over manufacturing,marketing,and strategy is granted to a licensee in return for:

You are a Member of Parliament (MP)in Canada.There is currently a debate concerning a growing number of U.S.and other firms entering the Canadian market.Some MPs have stated that "enough is enough" and that they are tired of having "foreign companies steal Canadian jobs." You have to make a speech on this issue. A traditional criticism among Canadian nationalists of inward FDI is that we will become a branch plant economy.Branch plants are a foreign subsidiary of a multinational parent corporation.Branch plants,usually of United States corporations,are common in Canada.Canadian nationalists claim that they have helped to obstruct the growth of a Canadian economy that is independent of other countries interests and self-directed.However,some Canadian economists argue that they have been an important factor in stimulating our economy and supporting our standard of living.What is your position? Explain.

There is a branch of economic theory known as internationalization theory that seeks to explain why firms often prefer exporting to foreign direct investment.

Much foreign direct investment is undertaken as a response to actual or threatened

Silicon Valley has a ______________ in the generation of knowledge related to the computer and semi-conductor industries,when looked at by Dunning's theory.

If one firm in a(n) _______________ cuts prices,this can take market share away from its competitors,forcing them to respond with similar price cuts in order to retain their market share.

There has been a rapid decrease in the total volume of FDI over the past 35 years.

You are a Member of Parliament (MP)in Canada.There is currently a debate concerning a growing number of U.S.and other firms entering the Canadian market.Some MPs have stated that "enough is enough" and that they are tired of having "foreign companies steal Canadian jobs." You have to make a speech on this issue. How does a potential host government's attitude toward FDI affect a company's willingness to engage in FDI in that country? Should a host government's attitude toward FDI be a major consideration when making a FDI decision? Why?

What is meant by the term Foreign Direct Investment? Describe the difference between the flow of foreign direct investment and the stock of foreign direct investment.

Eliminating double taxation of foreign income is one incentive many counties have created to encourage domestic firms to undertake FDI.

The _______________ view of FDI traces its roots to Marxist political and economic theory.

Despite its advantages,FDI has been described as an "expensive" and "risky" international growth strategy.Other things being equal,why is FDI expensive and risky? Compare the risks involved with FDI to the risks involved with exporting and licensing.

Generally speaking,there has been a(n) ______________ in the past 35 years.