Macro A2 - Measures Of Development

Question 1

Foreign direct investment (FDI)

Answer 1

When a global firm sets up a factory or makes an ownership investment in a different country

Question 2

Trans National Firms

Answer 2

A firm that is involved with the international production of goods or services, foreign investments, or income and asset management in more than one country.

Question 3

Advantages of FDI

Answer 3

Economic growth
Human capital development
Improvement of technology
Increase in domestic exports
Exchange rate stability
Improved capital flow
Creation of a competitive market
Combats climate change

Question 4

Disadvantages of FDI

Answer 4

Will reduce domestic investment
Risk from political changes
Negative exchange rates
Higher production costs
Expropriation
Modern-day economic colonialism
Poor working conditions
May hinder domestic exports
Government will have to invest in infrastructure
FDI may have power over government