FDI does not benefit the host country's balance of payments if the foreign subsidiary creates demand for home-country exports of capital equipment, intermediate goods, or complementary products.

Question

Quizplus · Accepted Answer

FDI can benefit the host country's balance of payments if the foreign subsidiary creates demand for home-country exports. This is because the exports can generate revenue for the home country, which can improve its balance of payments position.

FDI Does Not Benefit the Host Country's Balance of Payments