Which of the following statements is true?
A)Multinational firms tend to reduce the flow of technology between countries.
B)Most foreign direct investment is found in labor-intensive industries.
C)Multinationals do not always help to reduce the trade deficit of the host country.
D)Foreign firms contribute to a significant increase in the host country's employment rate.
E)Foreign direct investment reduces the stock of capital of the domestic country.

Question

Quizplus · Accepted Answer

While multinational corporations can bring in foreign direct investment and contribute to job creation in the host country, they do not always help to reduce the trade deficit of the host country. This is because multinational corporations may import inputs from their home country or other countries rather than sourcing them locally, which can contribute to the trade deficit. Furthermore, multinational corporations may repatriate their profits back to their home country rather than reinvesting them in the host country, which can also contribute to the trade deficit.

Which of the Following Statements Is True