Host governments worry that FDI is accompanied by some loss of economic independence.Their fear is attributed to:

Question

Quizplus · Accepted Answer

Transfer pricing enables multinational corporations to manipulate the prices of goods and services they trade between their different subsidiaries in different countries. This can lead to loss of revenue for the host government in terms of tax. Repatriation of funds means that profits made by foreign companies can be returned to their home country, which can have negative effects on the host economy. These factors can contribute to a loss of national sovereignty for the host government.

Host Governments Worry That FDI Is Accompanied by Some Loss