Trade + Environment In Services

Question 1

FDI

Answer 1

Flow of funding provided by investors to establish or Aquire foreign companies/ to expand finance in existing foreign companies that investors own in host countries.

Provides sufficient ownership to control/influence management of foreign company in host country.

Question 2

MNE

Answer 2

Firms owning and controlling operations in more than one country. Has HQ in home country and foreign affiliates/subsidiaries located in one or more host countries.

Question 3

International portfolio investment

Answer 3

Foreign securities investment with no management control

Question 4

Transfer pricing

Answer 4

Used by MNEs to reduce the tax they pay. They use transfer pricing to report more of their profits in low tax countries even when these profits are earned in high tax countries.