If the American company Stryker builds and operates a new factory in France,
A)it engages in foreign direct investment.By itself this action lowers U.S.net capital outflow.
B)it engages in foreign direct investment.By itself this action raises U.S.net capital outflow.
C)it engages in foreign portfolio investment.By itself this action lowers U.S.net capital outflow.
D)it engages in foreign portfolio investment.By itself this action raises U.S.net capital outflow.

Question

Quizplus · Accepted Answer

Building and operating a new factory in a foreign country constitutes foreign direct investment (FDI), as it involves a long-term and substantial commitment of resources to a foreign operation. FDI leads to an increase in the outflow of capital from the home country to the host country. Therefore, Stryker's action would raise the U.S. net capital outflow, which is the difference between the outflow and inflow of capital from the country.

If the American Company Stryker Builds and Operates a New