Firms that engage in FDI avoid problematic trade barriers because the physical presence of a foreign firm earns it the same privileges as a local firm.

Question

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By establishing a physical presence through foreign direct investment (FDI), firms can circumvent trade barriers such as tariffs and quotas, as their operations within the host country often grant them the same rights and privileges as local firms. This allows them to compete more effectively in the local market.

Firms That Engage in FDI Avoid Problematic Trade Barriers Because