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International Investment Theories Quiz

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Which theory suggests that international investment flows are driven by differences in factor endowments among countries?

Factor Proportions Theory

Explanation

Investment flows driven by factor endowments differences.

Which theory suggests that multinational enterprises (MNEs) engage in foreign direct investment (FDI) to internalize market imperfections and protect their technological advantages?

Internalization Theory

Explanation

MNEs invest to internalize market imperfections.

According to the OLI framework, what does the 'O' stand for?

Ownership

Explanation

'O' stands for ownership in OLI framework.

According to the Linder hypothesis, what drives international trade patterns?

Differences in consumer preferences

Explanation

Trade patterns driven by consumer preference differences.

According to the Linder hypothesis, what is the key factor that determines the similarity in consumer preferences between two countries?

Economic development

Explanation

Similarity in consumer preferences driven by economic development.

According to the eclectic paradigm, what are the three factors influencing the choice of foreign market entry mode?

Ownership, location, and internalization

Explanation

Entry mode influenced by ownership, location, and internalization.

Which international investment theory emphasizes the role of innovation and product life cycles in driving foreign direct investment (FDI)?

Product Life Cycle Theory

Explanation

Innovation and product life cycles driving FDI.

What is the primary assumption of the Comparative Advantage Theory in the context of international trade?

Perfect competition in markets

Explanation

Assumption of perfect competition.

According to the theory of factor proportions, what factor determines a country's comparative advantage?

Capital

Explanation

Capital determines comparative advantage.

#10

Which theory suggests that firms invest abroad to exploit economies of scale and scope, as well as to gain efficiency and cost advantages?

Eclectic Paradigm

Explanation

Firms invest to exploit economies of scale and scope.

#11

What is the primary criticism of the Factor Proportions Theory?

Assumes constant factor endowments

Explanation

Criticism: assumes constant factor endowments.

#12

In the context of the OLI framework, what does 'L' stand for?

Location

Explanation

Location in the OLI framework.

#13

According to the theory of comparative advantage, what should countries specialize in?

Producing goods with the lowest opportunity cost

Explanation

Countries specialize in low opportunity cost goods.

#14

In the context of international investment, what does the term 'Greenfield investment' refer to?

Investment in new facilities or projects from the ground up

Explanation

Investment in new facilities or projects.

#15

Which international investment theory argues that firms engage in foreign direct investment (FDI) to acquire and exploit monopolistic advantages in foreign markets?

Monopolistic Advantage Theory

Explanation

Firms invest to exploit monopolistic advantages.

#16

In the context of international investment, what is the primary focus of the Market Imperfections Theory?

Internalization of market imperfections

Explanation

Focus on internalizing market imperfections.

#17

Which theory argues that multinational enterprises (MNEs) engage in foreign direct investment (FDI) to exploit their ownership-specific advantages in foreign markets?

Eclectic Paradigm

Explanation

MNEs exploit ownership-specific advantages.

International Investment Theories Quiz

Which theory suggests that international investment flows are driven by differences in factor endowments among countries?

Which theory suggests that multinational enterprises (MNEs) engage in foreign direct investment (FDI) to internalize market imperfections and protect their technological advantages?

According to the OLI framework, what does the 'O' stand for?

According to the Linder hypothesis, what drives international trade patterns?

According to the Linder hypothesis, what is the key factor that determines the similarity in consumer preferences between two countries?

According to the eclectic paradigm, what are the three factors influencing the choice of foreign market entry mode?

Which international investment theory emphasizes the role of innovation and product life cycles in driving foreign direct investment (FDI)?

What is the primary assumption of the Comparative Advantage Theory in the context of international trade?

According to the theory of factor proportions, what factor determines a country's comparative advantage?

Which theory suggests that firms invest abroad to exploit economies of scale and scope, as well as to gain efficiency and cost advantages?

What is the primary criticism of the Factor Proportions Theory?

In the context of the OLI framework, what does 'L' stand for?

According to the theory of comparative advantage, what should countries specialize in?

In the context of international investment, what does the term 'Greenfield investment' refer to?

Which international investment theory argues that firms engage in foreign direct investment (FDI) to acquire and exploit monopolistic advantages in foreign markets?

In the context of international investment, what is the primary focus of the Market Imperfections Theory?

Which theory argues that multinational enterprises (MNEs) engage in foreign direct investment (FDI) to exploit their ownership-specific advantages in foreign markets?

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