ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Exports generate foreign cash inflows, whereas imports require cash outflows.
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Direct foreign investment requires cash outflows but generates future inflows either through remitted earnings back to the MNC.
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Direct foreign investment requires MNCs acquisition of foreign assets.
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An MNC may use international money or bond markets to obtain funds at a lower cost than they can be obtained locally
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Detailed explanation-1: -As we have noted earlier on, MNCs are facilitiators of FDI. FDI creates economic relations of an integrative nature and involves the corporation in the internal affairs of a country.
Detailed explanation-2: -Which of the following statements is true about the growth of foreign direct investment in the world economy over the last few decades? FDI has accelerated faster than world trade growth. Which of the following factors has had a positive effect on the volume of foreign trade investments?
Detailed explanation-3: -Foreign direct investment (FDI) is necessary for the creation of an MNE. Therefore, reliable and high quality FDI statistics are necessary for policy-making and for tracking globalisation.
Detailed explanation-4: -On one hand, developing countries have encouraged FDI as a means of financing the construction of new infrastructure and the creation of jobs for their local workers. On the other hand, multinational companies benefit from FDI as a means of expanding their footprints into international markets.