chapter 6 IB

Foreign portfolio investment (FPI) is a special case of foreign direct investment (FDI).

• True
• FLASE

Location-bound resources are resources that cannot be transferred from one country to another

• True
• FLASE

A joint venture is a company is owned by two or more parent companies

• True
• FLASE

The expectation of knowledge spillovers is a major motivation for governments to attract foreign investors to their country.

• True
• FLASE

Multinational companies concerned about dissemination risk prefer to establish a licencing contract instead of a wholly owned subsidiary.

• True
• FLASE

Reduced contract monitoring and enforcement costs are an example of an internalization advantage.

• True
• FLASE

The shift in the relative bargaining power between MNEs and host governments after the foreign investor incurred the sunk costs of their initial investment is known as

• ?    Obsolescing bargain
• ?    Resurgent bargain
• ?    Empowered negotiation
• ?    Resurgent negotiation

An FDI in which type of activity would be an example of upstream vertical FDI?

• ?    A sales and marketing office
• ?    A replication of the operation in the home country
• ?    An operation covering all stages of the value chain
• ?    A manufacturing facility for components of the firm’s main product

Which of the following is not an element of the OLI paradigm?

• ?    Locational advantages
• ?    Ownership advantages
• ?    Internalization advantages
• ?    All of the above answers are elements of the OLI paradigm.

A multinational enterprise is defined as an enterprise that

• ?    Has sales in more than one country
• ?    Has subsidiaries in more than one country
• ?    Has employees from more than one country
• ?    Is buying components in more than one country