#1
Which of the following is a form of foreign direct investment?
Opening a subsidiary in a foreign country
ExplanationEstablishing a branch in another nation for investment purposes.
#2
What does FDI stand for?
Foreign Direct Investment
ExplanationInvestment from one country into another involving ownership or control.
#3
Which of the following is NOT a benefit of foreign direct investment (FDI)?
Decrease in economic growth
ExplanationFDI typically stimulates economic growth rather than decreasing it.
#4
In which sector does FDI often contribute significantly to infrastructure development?
Telecommunications
ExplanationFDI in telecommunications often boosts infrastructure.
#5
Which of the following factors does NOT typically influence a company's decision to engage in foreign direct investment (FDI)?
Technological advancements
ExplanationFDI decisions are rarely based solely on technological advancements.
#6
Which factor often motivates companies to engage in FDI?
Access to new markets and resources
ExplanationSeeking opportunities in new territories for growth and expansion.
#7
What is the primary difference between FDI and foreign portfolio investment (FPI)?
FDI is long-term investment for control or significant influence, while FPI is short-term investment for financial gain.
ExplanationFDI aims for control or influence, while FPI focuses on short-term financial gains.
#8
What is a greenfield investment?
An investment in a new venture, often involving construction of new facilities
ExplanationInvesting in a new project or venture, usually involving building from scratch.
#9
Which economic theory suggests that FDI is driven by the desire to exploit monopolistic advantages?
Market Imperfections Theory
ExplanationTheory suggesting FDI seeks monopoly advantages in foreign markets.
#10
Which of the following is NOT a mode of entry into foreign markets for FDI?
Offshoring
ExplanationOffshoring refers to relocating business processes, not FDI entry.
#11
Which of the following is an example of horizontal FDI?
A company in the United States opening a new factory in China to take advantage of lower labor costs.
ExplanationExpanding operations to a foreign country for cost benefits.
#12
What is the main advantage of mergers and acquisitions (M&A) as a form of FDI?
Faster entry into foreign markets
ExplanationAccelerated market entry through acquisition or merger.
#13
Which of the following is NOT a potential risk associated with foreign direct investment (FDI)?
Limited access to new technologies
ExplanationFDI often provides access to new technologies, minimizing this risk.
#14
What is the term for FDI where a company expands its operations upstream or downstream in the production process in a foreign country?
Vertical integration
ExplanationExtending operations along the production chain in another nation.
#15
What is the term for FDI where a company acquires a supplier or distributor in a foreign country?
Vertical integration
ExplanationExtending control over suppliers or distributors in another nation.