IAI Actuarial Core Principles · Business Economics · Globalisation and multinational business
Which of the following is a likely benefit to a host economy such as India from inward FDI by a multinational?
A likely benefit of inward FDI is the transfer of technology and management skills together with extra capital and employment. It does not guarantee a current account improvement, remove repatriation of profits, or eliminate competition, so those alternatives are incorrect.
- AA guaranteed improvement in the current account within one year
- BTransfer of technology and management skills, plus additional capital and employmentCorrect
- CElimination of competition for domestic firms
- DA permanent fall in the exchange rate
- Complete removal of profit repatriation to foreign owners
Explanation
Inward FDI typically brings capital, technology, management know-how and jobs. It does not guarantee current account gains, as profits are repatriated and imports of inputs may rise. It often increases competition rather than eliminating it, and it does not imply a permanent exchange rate fall.
Did you get it right without looking?
One question tells you little. A timed set on Globalisation and multinational business shows your real accuracy, how long you take and where you lose marks.
More Globalisation and multinational business questions
- The spot rate is ₹80 per US dollar. Indian one-year interest rates are 8% and US one-year rates are 4%. Under covered interest rate parity, …
- Which statement about the role of multinational corporations (MNCs) and capital market liberalisation as drivers of globalisation is most ac…
- Which statement best describes economic globalisation as it affects a business?
- Which of the following is a non-tariff barrier to trade?
- Which of the following is a recognised cost of globalisation for a developing economy such as India?
- Which of the following is a likely benefit of financial globalisation for Indian life insurers and the wider economy?