role of FDI, aid and debt

Question 1

why do fdi target developing countries

Answer 1

• rich natural resources
• growing market
• gvt regulations easy
• cost labor low

Question 2

advantages associated with fdi

Answer 2

• fill gap money
• MNCs provide employment, education, training
• MNC greater access to technology
• gvt gain more money
• MNC improve infrastructure
• more choices at lower prices for consumers

Question 3

problems with fdi

Answer 3

• little education, cheap labor
• too much power and influence
• MNC transfer profit
• mistreat natural resources
• lots of pollution
• money flows out of the developing country

Question 4

foreign aid

Answer 4

• help natural disaster
• improve political strategic relations
• fill saving gap and encourage investment
• fund specific projects

Question 5

categories of aid

Answer 5

• humanitarian aid = short term

- development aid = long term, eg: ODA, OECD

Question 6

concerns about aid

Answer 6

• no correlation between the level aid and level of development
• interest low minority that government project
• affect domestic producers badly

Question 7

role of ngo

Answer 7

• provide disaster relief and promote development
• lobbyist to influence gvt in developed countries
• improve human capital
• focus on women

Question 8

debt and imf

Answer 8

• heavily indebted poor country (HPC)

- multilateral debt relief

Question 9

effect of imf funding

Answer 9

• increase unemployment
• decrease low real wages
• decrease access to free education and health care
• increase prices of essential product

Question 10

arguments for debt relief

Answer 10

• cannot pay their debt
• gvt unable spend money on areas
• eonomic growth slower
• odious debt: did not serve the country
• boomerang effect=environmental cost, drug usage, terrorism, more immigration , more conflicts…

Question 11

types of aid

Answer 11

• official development assistance ODA = from the gvt

- unofficial = from ngo

Question 12

types of development aid

Answer 12

• long term loans = low interest rate, repayable 15-20 years
• tied aid = under conditions, buy goods from donor
• project aid = no need to repaid eg: world bank
• technical assistance aid = combined with project aid
• commodity aid = increase prodctivity

Question 13

fdi def

Answer 13

Overseas investment by multinational corporations

Question 14

greenfield investment def

Answer 14

a form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Question 15

Corporate Social Responsibility (CSR)

Answer 15

as the voluntary activities undertaken by a company to operate in an economic, social and environmentally sustainable manner

Question 16

Official development assistance ODA

Answer 16

is a term coined by the Development AssistanceCommittee (DAC) of the Organisation for Economic Co-operation and Development(OECD) to measure aid. The DAC first used the term in 1969.

Question 17

tied aid

Answer 17

is foreign aid that must be spent in the country providing the aid (the donor country) or in a group of selected countries

Question 18

project aid

Answer 18

gives for a specific purpose

Question 19

technical assistance aid

Answer 19

Development aid (also developmentassistance, technical assistance, international aid, overseas aid, official development assistance (ODA), or foreignaid) is financial aid given by governments and other agencies to support the economic, environmental, social, and political development of developing countries

Question 20

commodity aid

Answer 20

Flows of goods and services with no payment in money or debt instruments in exchange.

Question 21

dependency on aid

Answer 21

as a situation in which a country cannot perform many of the core functions of government, such as operations and maintenance, or the delivery of basic public services, without foreign aid funding and expertise

Question 22

imf

Answer 22

an international organization headquartered in Washington, D.C., of “188 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty

Question 23

debt relief

Answer 23

reduction or cancellation of debts

Question 24

odious debt

Answer 24

debt that has been incurred by corrupt governments

and used for purposes that did not serve the interests of the people

Question 25

transfer pricing def

Answer 25

is the setting of the price for goods and services sold between controlled (or related) legal entities within an enterprise. For example, if a subsidiary company sells goods to a parent company, the cost of those goods paid by the parent to the subsidiary is the transfer price.