Which of the following is a possible adverse effect of FDI on a host country's balance-of-payments position?
A)A foreign subsidiary exports a substantial number of its outputs abroad.
B)A foreign subsidiary gets a substantial number of its inputs from the host country.
C)Increased competition in the domestic markets.
D)Subsequent outflow of earnings from the foreign subsidiary to its parent company.

Question

Quizplus · Accepted Answer

Set against the initial capital inflow that comes with FDI must be the subsequent outflow of earnings from the foreign subsidiary to its parent company.Such outflows adversely affect balance-of-payments accounts by showing up as capital outflow on them.

Which of the Following Is a Possible Adverse Effect of FDI