Unit 2: Foreign Direct Investment - Group 3

_______ influence how international companies operate in host nations.

• Tax breaks

• Financial incentives

• Grant loans

• Performance demands

The ____ states that firms undertake foreign direct investment when the features of a particular location combine with ownership and internalization advantage to make a location appealing for investment.

• Eclectic theory

• International product life cycle theory

• Internalization

• Market power theory

Which of these are the main reasons that account for the growth of FDI flows over the past decade?

• Diversity and globalization

• Diversity and telecommunications

• Globalization and mergers and acquisitions

• Telecommunications

The purchase of physical assets or a significant amount of ownership of a company in another country to gain a degree of management control is referred to as _____

• Portfolio investment

• Vertical integration

• Foreign direct investment

• Mergers

In the _______ product stage, the company directly invests in production facilities in those countries where demand is great enough to warrant its own production facilities

• New

• Declining

• Maturing

• Standardized

Financial incentives include all of these except

• Cash grant

• Lower tax rates

• Infrastructure improvements

• Low-interest loan

In which of these stages is a good produced in the home country because of uncertain domestic demand and to keep production close to the research department?

• The new product stage

• The standardized product stage

• The maturing product stage

• The declining product stage

Which of these methods can a home country use to promote FDI?

• Outright sanctions

• Grant loans

• Infrastructure improvements

• Ownership restrictions

Which of these is a market imperfection?

• Portfolio investment

• PI

• Greenfield barrier

• Trade barriers

Which of these activities is recorded as a reduction in the balance of payments account?

• Undertake FDI

• Exports of goods and services

• Receive FDI

• Transfers from abroad