According to the free market view,how does FDI increase the efficiency of world economy through MNEs?
A) The MNE is an instrument for dispersing the production of goods and services to the most efficient locations around the globe.
B) MNEs extract profits from the host country and take them to their home country and help all countries realize economies of scale.
C) When an MNE produces products, profits from the investment go abroad, and hence the MNE helps foreign exchange to rotate.
D) A foreign-owned manufacturing plant may import many components from its home country, thus improving the balance of payments of the host country.
E) MNEs increase the efficiency of world economy by increasing the flow of capital in the world market.

Question

Quizplus · Accepted Answer

According to the free market view, FDI increases the efficiency of the world economy through MNEs by dispersing the production of goods and services to the most efficient locations around the globe. MNEs use their global presence to optimize their production processes by locating manufacturing plants and sourcing components in countries where it is most efficient to do so. This helps to increase the overall efficiency of the world economy by allowing resources to be used more efficiently.

According to the Free Market View,how Does FDI Increase the Efficiency