An oil-rich country in the Middle East wants to develop its own refining industry but lacks the technology to do so. To accomplish their goal, they decide to enter into an agreement with a U.S. firm that has this technology. The U.S. firm is pleased to make this agreement because without it, they could never gain value from their technology in this country due to its limits on FDI. What type of agreement did these companies use?

Question

Quizplus · Accepted Answer

A turnkey agreement is when a firm sets up a plant for a foreign client and hands over the "key" when the plant is fully operational. This allows the oil-rich country to gain the technology needed for refining without direct foreign investment.

An Oil-Rich Country in the Middle East Wants to Develop