AGB 302 CHAPTER 8 EXAM
QUESTIONS AND ANSWERS
Foreign Direct Investment (FDI) - ANS-occurs when a firm invests directly in facilities to
produce or market a good or service in a foreign country
Greenfield Investment - ANS-Establishing a new operation in a foreign country
flow of FDI - ANS-the amount of FDI undertaken over a given time period (normally 1
year)
Stock of FDI - ANS-refers to the total accumulated value of foreign-owned assets at a
given time
Outflows of FDI - ANS-Flow of foreign direct investment out of a country
Inflows of FDI - ANS-Flow of foreign direct investment into a country
Eclectic Paradigm (Dunning) - ANS-attempts to combine the two other perspectives into
a single holistic explanation of foreign direct investment
location-specific advantages - ANS-Advantages that arise from using resource
endowments or assets that are tied to a particular foreign location and that a firm finds
valuable to combine with its own unique assets (such as the firm's technological,
marketing, or management know-how).
Dunning - ANS-Argue that location specific advantages are of considerable importance
in explaining the nature and direction of FDI
Externalities (spillers) - ANS-Benefit from each other's knowledge generation
Pragmatic Nationalism - ANS-A political view that only approves FDI when its benefits
outweigh its costs.
Radical view on FDI (Marxist theory) - ANS-A political view that sees FDI as an
instrument of imperialism and a vehicle for foreign exploitation.
Free market view on FDI (adam smith and david ricardo) - ANS-A political view that
suggests that FDI unrestricted by government intervention is the best.
QUESTIONS AND ANSWERS
Foreign Direct Investment (FDI) - ANS-occurs when a firm invests directly in facilities to
produce or market a good or service in a foreign country
Greenfield Investment - ANS-Establishing a new operation in a foreign country
flow of FDI - ANS-the amount of FDI undertaken over a given time period (normally 1
year)
Stock of FDI - ANS-refers to the total accumulated value of foreign-owned assets at a
given time
Outflows of FDI - ANS-Flow of foreign direct investment out of a country
Inflows of FDI - ANS-Flow of foreign direct investment into a country
Eclectic Paradigm (Dunning) - ANS-attempts to combine the two other perspectives into
a single holistic explanation of foreign direct investment
location-specific advantages - ANS-Advantages that arise from using resource
endowments or assets that are tied to a particular foreign location and that a firm finds
valuable to combine with its own unique assets (such as the firm's technological,
marketing, or management know-how).
Dunning - ANS-Argue that location specific advantages are of considerable importance
in explaining the nature and direction of FDI
Externalities (spillers) - ANS-Benefit from each other's knowledge generation
Pragmatic Nationalism - ANS-A political view that only approves FDI when its benefits
outweigh its costs.
Radical view on FDI (Marxist theory) - ANS-A political view that sees FDI as an
instrument of imperialism and a vehicle for foreign exploitation.
Free market view on FDI (adam smith and david ricardo) - ANS-A political view that
suggests that FDI unrestricted by government intervention is the best.
