Foreign Direct Investment (FDI) Quiz

Which of the following best describes the term Foreign Direct Investment (FDI)?

• When a country makes an investment into a company

• When a company makes an investment into a foreign country and has right to control

• When a domestic country invests into its own companies

• When foreign individuals invest in domestic stock markets

Benefit of foreign direct investment (FDI) include all of the following EXCEPT:

• The resource transfer effect

• National sovereignty and autonomy

• The balance of payments effect

• The employment effect

FDI in manufacturing requires the establishment of ___

• Service facilities

• Capital contribution

• Office facilities

• Production facilities

Which is an example of the 'market-seeking' strategy of FDI?

• Huawei invested in the rapidly growing mobile phone market in Africa.

• Zara located its manufacturing facilities near major fashion markets like Europe

• Nike manufactured shoes in low-wage Asian countries.

• Caterpillar entered a joint venture with Mitsubishi to improve production efficiency.

The foreign direct investment includes _______.

• Human resources

• Intellectual properties

• Tangible goods

• Intangible goods

Economic determinants can be grouped for analytical convenience into clusters: natural ___(1)___, ___(2)____ markets, and others

(a)  

 More expansion of foreign direct investment can boost __________

• Money circulation

• Demand

• Employment

• Unemployment

Historically, most FDI has been directed at the ____________nations of the world as firms based in advanced countries invested in____________. Fill in the blank with one of the following:

• underdeveloped, underdeveloped countries

• developed; underdeveloped countries.

•  developed; each other's markets.

• underdeveloped; each other's markets

Which of the companies we mention in the case study?

• 1. Apple

• LG

• 1. Samsung

• 1. Coca Cola

One of the challenges of pursuing "resource-seeking" FDI is:

• Difficulty in accessing needed raw materials

•  High shipping costs for goods from abroad.

•  Political and economic risk in the host country.

• Loss of control over production operations.