Which of the following is a disadvantage of foreign investment in Canada?
A)Canada is able to avoid becoming a debtor nation.
B)Canada has a favourable balance of trade.
C)Creation of a "branch plant economy" in Canada.
D)This breaks the rules of NAFTA.

Question

Quizplus · Accepted Answer

"Branch plant economy" refers to the situation where foreign investors establish manufacturing facilities in Canada to take advantage of lower costs and proximity to the US market, but the profits and management decisions are controlled by the foreign parent company. This can lead to a disadvantageous situation for Canada, as the profits generated by the branch plants may not stay in Canada, and the economy is heavily dependent on foreign investment instead of developing indigenous industries.

Which of the Following Is a Disadvantage of Foreign Investment