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WorksheetsForeign direct investment (FDI)
Total questions: 50
Worksheet time: 2hrs 40mins
Which of following are examples of foreign direct investments?
Mergers
Acquisitions or partnership in retail
Vertical FDI
Service & Manufacturing
More expansion of foreign direct investment can boost:
Unemployment
Supply
Employment
Money circulation
Which of the following are benefits of Foreign direct investments?
Job creation
Non- improved new technology
Helping countries with limited resources
No difference in government policies
What is Foreign direct investment?
This is when a country makes an investment into a company.
This is when a company makes an investment into a foreign country and has the right to control.
When a domestic country invest into its own companies.
When a foreign individual invest in domestic stock markets
One reason direct investment may be prefered to portfolio is
it fills the savings investment gap.
it doesn't pose a threat to national sovereignty
it doesn't create an outflow on primary income.
it is more long term and stable.
One possible disadvantage of FDI is
transfer pricing and tax avoidance.
interest payments rising.
the DSR rising.
increased foreign ownership.
The developed markets are
USA
Germany.
Singapore
Japan
The developed markets are
USA
Germany.
Singapore
Japan
When firms invest in the same industry overseas as it operate back at home is called...
Vertical FDI
Horizontal FDI
Foreign Direct Investment or FDI occurs when a company from one country invests in another country as an effort to secure lasting interest in the other country's enterprises to produce and/market a product or service.
True
False
Forms of international investment are:
Investing in enterprises with 100% international capita
International franchising
International franchising
Exporting goods
A company that invests investment (in the form of product marketing or manufacturing subsidiaries) into many countries is called ________.
Direct export company
Foreign company
Multinational company
Company with global business relationship
What types of risks are insured through?
Deprived of ownership, Damage due to war
Inability to return profits to the country itself, Deprived of ownership
Damage due to war, Inability to return profits to the country itself
Deprived of ownership, Damage dut to war, Inability to return profits to the country itself
How does the UK have policies to control outward FDI over time ?
Prohibition of FDI
Promote liberalization of FDI management regulations
Exchange control to limit the amount of capital that businesses can take out of the country.
Remove certain fields
Why do people think franchising is preferred to FDI?
The business has a valuable secret that the licensing contract cannot adequately protect
Less expensive, less risky
Strictly control foreign business entities
The skills of the business follow a franchise
The establishment of a wholly new operation in a foreign country is called:
An acquisition
A merger
A greenfield investment
A multinational venture
Most FDI is direct toward:
China
The United States
Emerging economies
Developed countries
Benefits of FDI include all of the following except:
The resource transfer effect
The employment effect
The balance of payments effect
National sovereignty and autonomy
What does the Gross Fixed Capital Formation describe?
Comparison of the inflows and outflows of FDI
Summarization of the total amount invested in facilities (such as factories, stores, buildings, etc…)
Summarization of the total amount invested in other nations
Differentiation between the flow and the stock of FDI
Which of the following is not a cost of outward FDI for host countries?
The effect on employment is FDI is a substitute for domestic production
When FDI is a substitute for direct exports
The initial capital outflow required to finance the FDI
Gains from learning valuable skills from foreign markets
Which is NOT TRUE about the primary costs of FDI to host countries are:
Loss of sovereignty and patriotism
Capital outflow
Adverse effects on competition and exports.
A low-cost production location
What is the most important concerns of home country costs?
The balance of payments.
Resource – Transfer Effects
Adverse Effects on Competition
Effect on Economic Growth
What impact could increased productivity growth, product and process innovations, and greater economic growth?
Resource – Transfer Effects
Balance of Payments Effects
Employment Effects
Effect on Competition and Economic Growth
What are the benefits of FDI to host countries?
Repatriated earnings from profits from FDI
Learning via FDI from operations abroad
Increased exports of components and services to host countries
Access to management expertise, skills and technology
Identify the theory that seeks to explain why firms often prefer FDI over licensing as a strategy for entering foreign market
Internationalization theory
Raymond Vernon’s theory
Dunning’s theory
Knickerbocker’s theory
Historically, political ideology toward FDI within a nation has ranged from a dogmatic radical stance that is hostile to all inward FDI at one extreme to an adherence to the noninterventionist principle of free market economics at the other. Between these two extremes is an approach that might be called :
The Radical View
Pragmatic Nationalism
The Free Market View
Shifting Ideology
Choose the wrong answer
The free market view argues that :
FDI by the MNE increases the overall efficiency of the world economy.
International production should be distributed among countries according to the theory of comparative advantage
The multinational enterprise (MNE) is an instrument of imperialist domination
the MNE is an instrument for dispersing the production of goods and services to the most efficient locations around the globe
Radical writers argue that :
MNEs extract profits from the host country and take them to their home country, giving nothing of value to the host country in exchange
International production should be distributed among countries according to the theory of comparative advantage
The MNE is an instrument for dispersing the production of goods and services to the most efficient locations around the globe
FDI by the MNE increases the overall efficiency of the world economy
The pragmatic nationalist view is that FDI has
benefits
boths benefits and costs
cost
brought nothing
Which form is not FDI?
investment made to develop a production or manufacturing plant from the ground up (“greenfield investments”)
mergers and acquisitions
licensing
joint ventures
What does the acronym FDI mean?
Free Daily Inputs
Foreign Dividends Investment
Foreign Direct Intervention
Foreign Direct Investment
What is a synonym for brownfield investment?
A new enterprise
An already existing enterprise
An investment that has financially underperformed
A risky investment
What is a synonym for greenfield investment?
New investment
Risky investment
Sour investment
Dubious investment
What is a joint venture?
A fancy name for a tourism deal
Public deal
Two or more private investors
Private and public investors
What is a mix venture?
Public deal
Fancy name for a tourism deal
Public and private investors
Two or more private investors
Which is repatriation?
An overseas address
Sending a foreigner to his/her country
Transferring profits to the home country
Transferring belongings to your home country
Which is a negative aspect of FDI
Job creation across the nation
Cash infusion into the local economy
Transfer of technology
Potential of a monopoly
Which is not a positive aspect of FDI?
Transfer of technology
Displacement of local enterprises
Job creation locally
Cash inflow
The establishment of a wholly new operation in a foreign country is called:
An acquisition
A merger
A greenfield investment
A multinational venture
When firms invest in the same industry overseas as it operate back at home is called...
Vertical FDI
Horizontal FDI
Foreign Direct Investment or FDI occurs when a company from one country invests in another country as an effort to secure lasting interest in the other country's enterprises to produce and/market a product or service.
True
False
Which of the following best describes the term "Foreign Direct Investment"?
when a country makes an investment into a company
when a company makes an investment into a foreign country
when a domestic country invests into its own companies
when foreign individuals invest in domestics stock market
A joint venture is when two or more businesses decide to work together and set up a new business
True
False
The Foreign Exchange Management Act,1999 (FEMA) was an act passed in winter session of parliament in india in the year ?
1991
1999
1998
1997
FEMA makes provisions for dealings in
Banking Regulation
Foreign Exchange
Real Estate
FEMA is considered as
Criminal Offence
civil offence
Both of Above
1. FEMA, 1999 aims to consolidate and amend the law relating to Foreign Exchange with an objective of -
facilitate external trade & payment, orderly development &maintenance of foreign exchange market in India
Regulate acceptance & utilisation of foreign contribution by certain individuals or associations or companies
Prohibit acceptance & utilisation of foreign hospitality for activities against national interest
All of the above
3. Resident under FEMA means
a person who -
Resided in India for 182 days or more during preceding financial year
Resided in India for 182 days or more during preceding calendar year
Resided in India for more than 182 days during preceding financial year
Resided in India for more than 182 days during preceding calendar year
8. Which among the following is the purpose behind enactment of FEMA?
Trade Foreign Exchange
Manage Foreign Exchange
Regulate Foreign Exchange
Conserve Foreign Exchange
