Question 1

Many investor nations now have government backed insurance programs to cover major types of foreign investment risk.The types of risks insurable through these programs include all of the following except:

Accepted Answer

A)  the risk of expropriation
B)  war losses
C)  the inability to transfer profits back home
D)  strategic business blunders
E)  currency restrictionsF) D) and E)
G) All of the above

Question 2

The _____________ of foreign direct investment refers to the amount of FDI undertaken over a given period (normally a year) .The _____________ of foreign direct investment refers to the total accumulated value of foreign-owned assets at any time.

Accepted Answer

A)  portfolio; current
B)  flow; stock
C)  stock; flow
D)  stockpile; portfolio
E)  annual accumulation; total accumulationF) B) and C)
G) All of the above

Question 3

International trade theory tells us that home country concerns about the negative economic effects of offshore production:

Accepted Answer

A)  are typically right on
B)  may be misplaced
C)  are typically irrelevant
D)  are typically negligible
E)  should be addressedF) A) and E)
G) C) and D)

Question 4

What are the benefits of inward FDI (i.e.FDI coming into a country from foreign sources) for the host country? Are these benefits compelling?

Accepted Answer

The three main benefits of FDI for the h...

Question 5

Control over manufacturing, marketing, and strategy is granted to a licensee in return for:

Accepted Answer

A)  increased taxation.
B)  decreased taxation.
C)  a royalty fee.
D)  company stock given to the government.
E)  profit sharingF) C) and E)
G) B) and C)

Question 6

Which of the following is not a reason that the radical position of MNEs was in retreat by the end of the 1980s?

Accepted Answer

A)  The strong economic performance of those developing countries that embraced capitalism rather than radical ideology
B)  The collapse of communisms in Eastern Europe
C)  The rise of democracy in the Western countries
D)  A growing belief by many radical countries that FDI can be an important source of technology and job and can stimulate economic growth
E)  The move to deregulate Western economiesF) C) and D)
G) A) and E)

Question 7

Countries have been known to occasionally manipulate _____________ to try to encourage their firms to invest at home.

Accepted Answer

A)  safety regulations
B)  tax rules
C)  environmental rules
D)  the stock market
E)  the mediaF) C) and D)
G) A) and D)

Question 8

An industry composed of a limited number of large firms (i.e.an industry in which four firms control 80 percent of a domestic market)  is referred to as a(n) :

Accepted Answer

A)  syndicate.
B)  cartel.
C)  oligopoly.
D)  monopoly.
E)  stratified polityF) D) and E)
G) B) and E)

Question 9

Some of Toyota's competitive advantage is due to its superior ability to manage the design, engineering and manufacturing of its automobiles.Despite the fact that some of its products could be licensed for production by another company it does not do so because _____________.

Accepted Answer

A)  Toyota does not want to lose control over its technology
B)  Toyota are strong believers in the internalization theory
C)  Toyota does not want to share profits and it is a large enough company to enter every market
D)  another company could not be as efficient a producer of cars as Toyota
E)  all of these answers are correctF) B) and E)
G) All of the above

Question 10

When two or more enterprises encounter each other in different regional markets, national markets, or industries, _____________ arises.

Accepted Answer

A)  a monopoly
B)  an oligopoly
C)  a cartel
D)  multipoint competition
E)  international competitionF) A) and B)
G) A) and E)

Question 11

High transportation costs and/or tariffs imposed on imports help explain why many firms prefer _____________ over _____________.

Accepted Answer

A)  foreign direct investment or licensing; exporting
B)  foreign direct investment or licensing; joint ventures
C)  exporting; foreign direct investment or licensing
D)  strategic alliances; foreign direct investment or licensing
E)  licensing; foreign direct investmentF) B) and C)
G) A) and B)

Question 12

The _______________ view argues that international production should be distributed among countries according to the theory of comparative advantage.

Accepted Answer

A)  conservative
B)  pragmatic nationalism
C)  free market
D)  radical
E)  liberalF) A) and E)
G) A) and B)

Question 13

Because they _______________, the product life-cycle theory and Knickerbocker's theory of FDI tend to be less useful from a business perspective.

Accepted Answer

A)  are descriptive rather than analytical
B)  have not stood the test of time
C)  are not widely known
D)  have not been empirically validated
E)  have not been widely usedF) A) and B)
G) A) and E)

Question 14

Since World War II, the largest source country for FDI outflows has been _____________

Accepted Answer

A)  Canada
B)  China
C)  United States
D)  United Kingdom
E)  JapanF) A) and E)
G) B) and E)

Question 15

Eliminating double taxation of foreign income is one incentive many counties have created to encourage domestic firms to undertake FDI.

Accepted Answer

A) True 
 B)False

Question 16

Technology takes jobs away from a host country that would otherwise remain there.

Accepted Answer

A) True 
 B)False

Question 17

Three main costs of inward FDI concern host countries.These are:

Accepted Answer

A)  the employment effect, the perceived loss of national sovereignty and autonomy, and the resource transfer effect
B)  the possible adverse effects of FDI on competition with the host country, the resource transfer effect, and the perceived loss of national sovereignty and autonomy
C)  the resource transfer effect, the employment effect, and the possible adverse effects of FDI on competition within the host country
D)  the possible adverse effects of FDI on competition within the host country, adverse effects on the balance of payments, and the perceived loss of national sovereignty and autonomy
E)  Loss of national sovereignty, increased materialism, increased income and wealth inequitiesF) B) and D)
G) B) and E)

Question 18

The beneficial effects of FDI may be reduced if most management and highly skilled jobs in the subsidiaries of foreign firms are reserved for _______________ nationals.

Accepted Answer

A)  host-country
B)  third-country
C)  home-country
D)  local
E)  expatriateF) A) and D)
G) A) and C)

Question 19

According to the International Trade Theory, FDI may cause all of the following except:

Accepted Answer

A)  stimulate economic growth.
B)  cause product prices to fall.
C)  cause higher taxes in host-countries.
D)  cause the lose of market share to international competitors if a company were prohibited from FDI and low-cost production locations.
E)  all of these answers are correctF) B) and C)
G) A) and B)

Question 20

In 1995, the OECD initiated talks to draft a Multilateral Agreement on Investment that would make it illegal for signatory states to discriminate against foreign investors.

Accepted Answer

A) True 
 B)False

Exam 7: Foreign Direct Investment

In 1995, the OECD initiated talks to draft a Multilateral Agreement on Investment that would make it illegal for signatory states to discriminate against foreign investors.

Correct AnswerverifiedShow Answer

Three main costs of inward FDI concern host countries.These are:

Correct AnswerverifiedShow Answer

When two or more enterprises encounter each other in different regional markets, national markets, or industries, _____________ arises.

Correct AnswerverifiedShow Answer

The beneficial effects of FDI may be reduced if most management and highly skilled jobs in the subsidiaries of foreign firms are reserved for _______________ nationals.

Correct AnswerverifiedShow Answer

Eliminating double taxation of foreign income is one incentive many counties have created to encourage domestic firms to undertake FDI.

Correct AnswerverifiedShow Answer

According to the International Trade Theory, FDI may cause all of the following except:

Correct AnswerverifiedShow Answer

An industry composed of a limited number of large firms (i.e.an industry in which four firms control 80 percent of a domestic market) is referred to as a(n) :

Correct AnswerverifiedShow Answer

Some of Toyota's competitive advantage is due to its superior ability to manage the design, engineering and manufacturing of its automobiles.Despite the fact that some of its products could be licensed for production by another company it does not do so because _____________.

Correct AnswerverifiedShow Answer

The _______________ view argues that international production should be distributed among countries according to the theory of comparative advantage.

Correct AnswerverifiedShow Answer

Technology takes jobs away from a host country that would otherwise remain there.

Correct AnswerverifiedShow Answer

International trade theory tells us that home country concerns about the negative economic effects of offshore production:

Correct AnswerverifiedShow Answer

Countries have been known to occasionally manipulate _____________ to try to encourage their firms to invest at home.

Correct AnswerverifiedShow Answer

Which of the following is not a reason that the radical position of MNEs was in retreat by the end of the 1980s?

Correct AnswerverifiedShow Answer

What are the benefits of inward FDI (i.e.FDI coming into a country from foreign sources) for the host country? Are these benefits compelling?

Correct AnswerverifiedThe three main benefits of FDI for the h...View AnswerShow Answer

Since World War II, the largest source country for FDI outflows has been _____________

Correct AnswerverifiedShow Answer

Control over manufacturing, marketing, and strategy is granted to a licensee in return for:

Correct AnswerverifiedShow Answer

Many investor nations now have government backed insurance programs to cover major types of foreign investment risk.The types of risks insurable through these programs include all of the following except:

Correct AnswerverifiedShow Answer

Because they _______________, the product life-cycle theory and Knickerbocker's theory of FDI tend to be less useful from a business perspective.

Correct AnswerverifiedShow Answer

The _____________ of foreign direct investment refers to the amount of FDI undertaken over a given period (normally a year) .The _____________ of foreign direct investment refers to the total accumulated value of foreign-owned assets at any time.

Correct AnswerverifiedShow Answer

High transportation costs and/or tariffs imposed on imports help explain why many firms prefer _____________ over _____________.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The three main benefits of FDI for the h...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The _ of foreign direct investment refers to the amount of FDI undertaken over a given period (normally a year) .The _ of foreign direct investment refers to the total accumulated value of foreign-owned assets at any time.

Correct Answer
verified

High transportation costs and/or tariffs imposed on imports help explain why many firms prefer _ over _.

Correct Answer
verified