CH 36 MNCs and FDI

Question 1

What are MNCs?

Answer 1

Coporations that operate in many different countries

Question 2

What is a FDI?

Answer 2

Foreign direct investment is when foreign MNC’s expand their operations and bring money into the country

Question 3

What are the reasons for FDI?

Answer 3

-To benefit from Economies of scale
-To access natural resources or cheap materials
-To lower transport and communications costs
-To access customers in differnet regions

Question 4

What are the advantages of FDI?

Answer 4

-Creating more jobs
-Investment in infastructure
-Developing skills
-Developing capital
-Contributing to taxes

Question 5

What are the disadvantages of FDI?

Answer 5

-Tax avoidance
-Environmental damage
-Repatriation