International MGT CH6 MC – Flashcards
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A type of FDI in which firms move upstream or downstream in different value chain stages in a host county is identified as
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vertical FDI
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Which of the following statements is correct?
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FDI flow
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The amount of FDI moving in a given period in a certain direction is:
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FDI flow
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Non-MNE firms can also do business abroad by:
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Licensing and franchising Outsourcing and engaging in FDI Exporting and importing
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The share of FDI-based value added of foreign affiliates of MNEs in world GDP:
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Rose from 7% in 1990 to 11% in 2010
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If BMW chooses to have some FDI in China, instead of selling its technology to a Chinese firm for a fee, this is an example of:
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Internalization
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MNEs' possession and leveraging of certain valuable, rare, hard-to-imitate, and organizationally embedded (VRIO) assets overseas in the context of FDI refer to:
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Ownership advantage
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Firms prefer FDI to licensing because:
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FDI reduces dissemination risks. FDI provides tight control over foreign operations. Certain know-how is difficult to convey without FDI.
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When entering foreign markets, basic entry choices include
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Exporting, licensing, and FDI
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Knowledge that can be written down and transferred without losing much of its richness is known as:
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Explicit
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Agglomeration advantages stem from:
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Knowledge spillovers among closely located firms that attempt to hire individuals from competitors. Industry demand that creates a skilled labor force whose members may work for different firms without having to move out of the region. Industry demand that facilitates a pool of specialized suppliers and buyers also located in the region.
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When one firm enters a foreign country through FDI, its rivals are likely to follow by undertaking additional FDI in a host country to:
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Acquire location advantages or neutralize the first mover's location advantages
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Between the 1950s and the early 1980s, the radical view was influential throughout
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Eastern Europe, Africa, Asia, and Latin America
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____ suggests that FDI, unrestricted by government intervention, will enable countries to tap into their absolute or comparative advantage by specializing in the production of certain goods or services.
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The free market view
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Most countries practice:
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Pragmatic nationalism
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Since the 1980s, countries such as Brazil, China, Hungary, India, Ireland, and Russia have adopted:
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FDI-friendly policies
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A political view that approves FDI only when its benefit outweighs its costs is known as:
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Pragmatic nationalism
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Which of the following statements is correct?
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Capital inflow can help improve a host country's balance of payments. Technology, especially more advanced technology from abroad, can create technology spillovers. FDI creates jobs directly and indirectly.
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The primary costs of FDI to host countries are:
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Loss of sovereignty, adverse effects on competition, and capital outflow
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What is a sovereign wealth fund?
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A state-owned investment fund funded by foreign exchange assets
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What are the benefits of FDI to home countries?
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Repatriated earnings from profits from FDI. Increased exports of components and services to host countries. Learning via FDI from operations abroad.
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Costs of FDI to home countries primarily center on:
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Capital and job loss
