When FDI occurs, what are the longrun effects of FDI
On industry output in the recipient nation?
A)There is no change in either the output of the capitalintensive or the laborintensive industry.
B)The laborintensive industry expands; the capital intensive industry contracts.
C)The capitalintensive industry expands; the labor intensive industry contracts.
D)Both capital and laborintensive industries expand in the same proportion.

Question

When FDI occurs, what are the long­run effects of FDI
On industry output in the recipient nation?
A)There is no change in either the output of the capital­intensive or the labor­intensive industry.
B)The labor­intensive industry expands; the capital­ intensive industry contracts.
C)The capital­intensive industry expands; the labor­ intensive industry contracts.
D)Both capital­ and labor­intensive industries expand in the same proportion.

Quizplus · Accepted Answer

The long-run effects of FDI suggest that the capital-intensive industry expands, while the labor-intensive industry contracts. This is because FDI typically brings advanced technology and capital to the recipient country, making production more capital-intensive. As a result, the industries that use more capital will expand, while those that rely more on labor will contract.

When FDI Occurs, What Are the Long­run Effects of FDI

When FDI Occurs, What Are the Longrun Effects of FDI