CHAPTER 8: Foreign Direct Investment

The amount of foreign direct investment (FDI) undertaken over a given time period is known as the flow of FDI.

FDI has been declining in the last few decades because protectionist pressures have become less intense.

Mergers and acquisitions are quicker to execute than greenfield investments.

Licensing involves the establishment of a new operation in a foreign country.

By placing tariffs on imported goods, governments can increase the cost of exporting relative to foreign direct investment and licensing.

An oligopoly is an industry composed of a limited number of large firms.

Rivals rarely imitate what a firm does in an oligopoly.

John Dunning pioneered the eclectic paradigm.

According to the pragmatic nationalistic view, the MNE is a tool for exploiting host countries to the exclusive benefit of their capitalist-imperialist home countries.

Only a few countries have adopted the free market view in its pure form.