FDI

Question 1

What is Foreign Direct Investment (FDI)?

Answer 1

A company from one country making a physical investment into building a factory in another country.

Question 2

What are the potential benefits of FDI for a host country?

Answer 2

• New Technologies
• Capital
• Products
• Organisational Technologies
• Management Skills

Question 3

How can FDI impact economic development?

Answer 3

It can provide a strong impetus to economic development.

Question 4

What advantages can a firm gain from FDI?

Answer 4

• New markets and marketing channels
• Cheaper production facilities
• Access to new technology
• Access to products, skills, and financing

Question 5

What technological advancements have facilitated the management of foreign investments?

Answer 5

New information technology systems and a decline in global communication costs.

Question 6

What was the average FDI flow in developing countries during the 1980s?

Answer 6

Less than $20 billion.

Question 7

What was the FDI flow in 1990?

Answer 7

$26.7 billion.

Question 8

What was the FDI flow in 1999?

Answer 8

$208 billion.

Question 9

What was the FDI flow in 2012?

Answer 9

$636 billion, up from $481 billion in 2008.

Question 10

What was the FDI flow in 2019?

Answer 10

$1.5 trillion.

Question 11

What do economists and financial analysts think about FDI?

Answer 11

It is said to promote the growth of the global economy.

Question 12

True or False: Detractors of FDI believe that local economies always benefit from it.

Answer 12

False.

Question 13

What concerns do detractors of FDI express?

Answer 13

Whether the local economy truly benefits, since earnings are controlled by an offshore parent company.