Foreign direct investment typically occurs when
A) the earnings of the parent company are invested in plant expansion overseas.
B) the parent company transfers jobs overseas.
C) the parent company closes its foreign production plants.
D) the parent company purchases bonds of foreign governments.

Question

Quizplus · Accepted Answer

Foreign direct investment occurs when a company invests in and controls a business entity in another country. This usually involves investing in plant expansion overseas to increase production and sales. Transferring jobs overseas is a form of outsourcing, which is not the same as foreign direct investment. Closing foreign production plants is the opposite of foreign direct investment. Purchasing bonds of foreign governments is a type of portfolio investment, not foreign direct investment.

Foreign Direct Investment Typically Occurs When