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Question
What is a wholly owned subsidiary? List its advantages.Answer
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Related questions
Q:
Which of the following is a major reason why many economists remain critical of the infant industry argument?
A.It makes the domestic industry inefficient.
B.It does not provide guaranteed employment for the citizens.
C.It affects the standards of living and per capita income of the people.
D.It promotes foreign direct investment.
E.It leads to reduced prices in domestic markets.
Q:
One of the main reasons why many economists remain critical of the infant industry argument is its reliance on the assumption that:
A.protection of manufacturing from foreign competition is harmful.
B.absolute advantage cannot sustain productivity of an industry.
C.foreign firms too come under the definition of infant industry when they newly enter a foreign market.
D.firms are unable to make efficient long-term investments by borrowing money from the domestic or international capital markets.
E.foreign competition will eventually cause domestic firms to improve the quality of their products.
Q:
Many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with well-established industries in developed countries, according to:
A.economic development argument.
B.comparative advantage theory.
C.national security argument.
D.infant industry argument.
E.mixed economy theory.
Q:
Which of the following is considered to be the ultimate objective of antidumping policies?
A.Protecting consumers from high prices
B.Preventing domestic firms from unloading their excess production in domestic markets
C.Protecting domestic producers from unfair foreign competition
D.Protecting consumers from substandard and hazardous products
E.Preventing foreign products from entering domestic market
Q:
The extra profit that producers make when supply is artificially limited by an import quota is referred to as a:
A.net profit.
B.quota rent.
C.trade surplus.
D.profit margin.
E.quota share.
Q:
Which of the following refers to a quota on trade imposed by the exporting country, typically at the request of the importing country's government?
A.Tariff rate quota
B.Quota rent
C.Voluntary export restraint (VER)
D.Quota share
E.Export embargo
Q:
Briefly describe the new trade theory.
Q:
What is meant by the term free trade? Is free trade compatible with the concept of mercantilism?
Q:
Which of the following helps a firm to preempt available demand, gain cost advantages related to volume, and build an enduring brand ahead of later competitors?
A.Monopolistic practices
B.Comparative advantages
C.Absolute advantages
D.First-mover advantages
E.Mercantilism
Q:
Describe Dunning's arguments regarding the location-specific advantages.
Q:
Under what circumstances will a firm favor foreign direct investment over exporting as an entry strategy?
Q:
"Firms prefer to acquire existing assets rather than undertake greenfield investments while contemplating FDI." Explain the reasons that support this argument.
Q:
Although it normally involves much longer-term commitments, franchising is essentially the service industry version of:
A.exporting.
B.licensing.
C.foreign direct investment.
D.greenfield investment.
E.diversifying.
Q:
Which of the following is NOT an option, due to the fact that many services have to be produced where they are sold?
A.FDI
B.Franchising
C.Greenfield investment
D.Exporting
E.Outsourcing
Q:
To encourage inward FDI, it is increasingly common for governments to:
A.offer tax concessions to foreign firms that invest in their countries.
B.exclude foreign companies from specific industries.
C.require that local investors own a significant proportion of the equity in a joint venture.
D.impose high custom duties on foreign firms.
E.prohibit MNEs from joining a cartel.
Q:
Which of the following is a major type of foreign investment risk that is insurable through government-backed programs?
A.Lack of funds
B.Risk of transaction loss
C.Poor strategic tie-ups
D.Risks of expropriation
E.Losses due to natural calamities
Q:
Offshore production refers to FDI undertaken:
A.to focus on extractive industries, such as oil and gas.
B.to serve the home market.
C.in shipping industries.
D.to decrease the prices of products in the host countries.
E.to capture tax benefits in the host country.
Q:
Which of the following statements is most likely to be true regarding the adverse effects of FDI on the host country?
A.It decreases the level of competition in the host country.
B.It tends to increase the prices of the products.
C.It leads to a high rate of unemployment in the long run.
D.When a foreign subsidiary imports a substantial number of its inputs from abroad, it results in a debit on the current account of the host country's balance of payments.
E.When a foreign subsidiary sends its profits to its home country, it results in the depletion of gold reserves of the host country.
Q:
Which account in the balance of payments records transactions involving the export and import of goods and services?
A.Current
B.Foreign
C.Internal
D.Tariff
E.Savings
Q:
Which of the following are national accounts that track both payments to and receipts from other countries?
A.Equity
B.Dematerialized
C.Balance of trade
D.Asset
E.Balance-of-payments
Q:
Indirect effects of FDI on employment in a host country arise when:
A.a foreign MNE employs a number of host-country citizens.
B.jobs are created because of increased local spending by employees of an MNE.
C.an MNE brings in managers from the home country for its operations in the host country.
D.an MNE recruits people from the host country for research and development.
E.an MNE sends home country employees to host countries for training.
Q:
According to the radical view of FDI, multinational enterprises (MNEs) that already exist in a country should be:
A.immediately nationalized.
B.made to pay higher taxes.
C.converted into publicly traded companies.
D.banned from obtaining finance from the financial institutions in the host country.
E.immediately privatized.
Q:
Which of the following states that combining location-specific assets or resource endowments and the firm's own unique assets often requires FDI, and it also requires the firm to establish production facilities where those foreign assets or resource endowments are located?
A.Strategic trade policy
B.Integration approach
C.Scramble theory
D.Eclectic paradigm
E.Infant industry argument
Q:
Which of the following involves producing goods at home and then shipping them to the receiving country for sale?
A.Outsourcing
B.Licensing
C.Franchising
D.Exporting
E.Diversifying
Q:
Once it undertakes FDI, a firm becomes a(n):
A.outsourcer.
B.retail chain.
C.offshore company.
D.multinational enterprise.
E.national corporation.
Q:
According to the U.S. Department of Commerce, which of the following, occurs whenever a U.S. citizen, organization, or affiliated group takes an interest of 10 percent or more in a foreign business entity?
A.Multilateral investment
B.Foreign direct investment
C.Reciprocal foreign investment
D.International divestment
E.Asset divestment
Q:
A firm's bargaining power is low when the host government places a low value on what the firm has to offer.
Q:
Despite the move toward a free market stance in recent years, many countries still have a rather pragmatic stance toward FDI.
Q:
An acquisition does not result in a net increase in the number of players in a market.
Q:
The indirect employment effects of FDI are often as large as, if not larger than, the direct effects.