Which of the following is an advantage to exporting goods to reach international markets rather than entering into some form of FDI?
A) fewer agency costs
B) fewer direct advantages from research and development
C) a greater risk of losing markets to copycat goods producers
D) an inability to exploit R&D as effectively as if also invested abroad

Question

Quizplus · Accepted Answer

Exporting goods allows firms to reach international markets without having to establish physical presence in those countries, which means there are fewer agency costs involved. FDI, on the other hand, requires setting up subsidiaries, hiring local staff, and complying with local laws and regulations, which can increase agency costs. The other options (B, C, and D) are disadvantages of exporting compared to FDI.

Which of the Following Is an Advantage to Exporting Goods