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International MGT CH6 MC

A type of FDI in which firms move upstream or downstream in different value chain stages in a host county is identified as
vertical FDI
Which of the following statements is correct?
FDI flow
The amount of FDI moving in a given period in a certain direction is:
FDI flow
Non-MNE firms can also do business abroad by:
Licensing and franchising
Outsourcing and engaging in FDI
Exporting and importing
The share of FDI-based value added of foreign affiliates of MNEs in world GDP:
Rose from 7% in 1990 to 11% in 2010
If BMW chooses to have some FDI in China, instead of selling its technology to a Chinese firm for a fee, this is an example of:
Internalization
MNEs’ possession and leveraging of certain valuable, rare, hard-to-imitate, and organizationally embedded (VRIO) assets overseas in the context of FDI refer to:
Ownership advantage
Firms prefer FDI to licensing because:
FDI reduces dissemination risks.

FDI provides tight control over foreign operations.
Certain know-how is difficult to convey without FDI.

When entering foreign markets, basic entry choices include
Exporting, licensing, and FDI
Knowledge that can be written down and transferred without losing much of its richness is known as:
Explicit
Agglomeration advantages stem from:
Knowledge spillovers among closely located firms that attempt to hire individuals from competitors.

Industry demand that creates a skilled labor force whose members may work for different firms without having to move out of the region.

Industry demand that facilitates a pool of specialized suppliers and buyers also located in the region.

When one firm enters a foreign country through FDI, its rivals are likely to follow by undertaking additional FDI in a host country to:
Acquire location advantages or neutralize the first mover’s location advantages
Between the 1950s and the early 1980s, the radical view was influential throughout
Eastern Europe, Africa, Asia, and Latin America
____ suggests that FDI, unrestricted by government intervention, will enable countries to tap into their absolute or comparative advantage by specializing in the production of certain goods or services.
The free market view
Most countries practice:
Pragmatic nationalism
Since the 1980s, countries such as Brazil, China, Hungary, India, Ireland, and Russia have adopted:
FDI-friendly policies
A political view that approves FDI only when its benefit outweighs its costs is known as:
Pragmatic nationalism
Which of the following statements is correct?
Capital inflow can help improve a host country’s balance of payments.

Technology, especially more advanced technology from abroad, can create technology spillovers.

FDI creates jobs directly and indirectly.

The primary costs of FDI to host countries are:
Loss of sovereignty, adverse effects on competition, and capital outflow
What is a sovereign wealth fund?
A state-owned investment fund funded by foreign exchange assets
What are the benefits of FDI to home countries?
Repatriated earnings from profits from FDI.

Increased exports of components and services to host countries.

Learning via FDI from operations abroad.

Costs of FDI to home countries primarily center on:
Capital and job loss

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