IB chapter 6 (FDI)

Foreign Direct Investment (FDI) refers to the investment made by _______ from one country into another country.

Which of the following is NOT a reason why countries seek to attract FDI?

• To acquire new technology and skills

• To increase employment opportunities

• To reduce competition in the domestic market

• To increase export opportunities

Which of the following is an advantage of FDI for the host country?

• Increased competition in the domestic market

• Decreased employment opportunities

• Increased foreign control over the domestic economy

• Increased capital inflows and investment opportunities

Why do countries seek FDI?

Evaluate responses using AI:

OFF

Answer explanation

Countries seek FDI to stimulate economic growth, create employment opportunities, and attract new technologies and expertise.

Which of the following is a disadvantage of FDI for the host country?

A. B. C. D.

• Increased competition in the domestic market

• Increased employment opportunities

• Increased domestic control over the foreign economy

• Decreased capital inflows and investment opportunities

Which of the following is NOT a mode of FDI?

• Joint venture

• Licensing

• Franchising

• Exporting

Which of the following is an example of horizontal FDI?

• A US automaker investing in a Japanese automaker

• A US automaker investing in a US auto parts supplier

• A US automaker investing in a Chinese tire manufacturer

• A US automaker investing in a US software company

Do you think Foreign Direct Investment (FDI) is important for a country's economic growth?

(in your own opinion, no right or wrong answer)

• Yes, FDI can bring in new technology, jobs, and capital to a country.

• No, FDI takes away jobs and resources from the host country.

• I'm not sure.

FDI is a form of portfolio investment.

• TRUE

• FALSE

Answer explanation

False.

FDI is not a form of portfolio investment but rather involves the acquisition of controlling ownership in a foreign company.

The benefits of FDI include the transfer of technology and knowledge, increased competition, job creation, and _______.