FDI

Question 1

FDI

Answer 1

investments by MNCs in countries overseas (plants, mergers)

Question 2

reasons for FDI

Answer 2

Nat Resources - MNCs may have tech needed to extract
Growing markets
Lower costs of labour
less gov reg (lower set up costs, tax concessions)

Question 3

pros of FDI

Answer 3

savings gap+ necessary for growth
employment (sometimes ed + training: quality)
access to research + marketing expertise
increased employment + incomes may= multiplier effect= growth
tax rev from MNCs
foreign money injection if mergers/ acquisitions
more choice + lower prices?
better allocation of resources

Question 4

cons of FDI

Answer 4

may bring own personnel (no extra employment/ just low skilled)
MNC power
transfer pricing (pay taxes to developing, not developed)
pollution (less legislation)
extract resources without dom benefit
capital intensive prod, but no employment (machines)
dom firms buying, normally only shares