Global Business Today Study Set 7

When a firm exports its products to a foreign country, foreign direct investment occurs.

The flow of foreign direct investment refers to the total accumulated value of foreign-owned assets at a given time.

The globalization of the world economy is having a negative effect on the volume of FDI.

Historically, most FDI has been directed at the developed nations of the world.

Mergers and acquisitions take longer to execute than a greenfield investment.

The process of exporting grants a foreign entity the right to produce and sell a firm's product.

The attractiveness of exporting is reduced when a product can easily be produced in almost any location.

According to internalization theory, one drawback of licensing is that it might result in a firm giving away technological know-how to a competitor.

There are at least 30 firms that control 70 percent of the computer printer business in Europe. This is an example of an oligopoly.

The eclectic paradigm is based on the idea that intellectual property is of considerable importance in explaining the direction of FDI.

According to the free market view, countries should specialize in the production of those goods and services that they can produce most efficiently.

A country that follows the pragmatic nationalist view would agree that FDI can benefit a host country through capital, skills, and jobs but these come at a cost.

In terms of employment, the indirect effects of FDI are often as large as, if not larger than, the direct effects.

FDI can result in a positive contribution to a host economy by supplying capital and technology which boost the country's economy.

An acquisition does not result in a net increase in the number of players in a market.

Offshore production refers to FDI undertaken to serve the host market.

Many investor nations now have government-backed insurance programs to cover major types of foreign investment risk like the risks of expropriation (nationalization), war losses, and the inability to transfer profits back home.

Historically, countries have occasionally manipulated the tax rules as a way to encourage domestic companies to invest at home.

Performance requirements are controls over the behavior of the MNE's local subsidiary.

The United Nations was the first multinational institution to govern FDI beginning in the 1930s.