threat of expropriation creates an incentive for the multinational firm to minimize inventory holdings in certain countries and to bring in goods only as needed.

Question

Quizplus · Accepted Answer

The threat of expropriation, which refers to the government seizing private property without compensation, can lead multinational firms to minimize inventory holdings in certain countries. This is because if their assets are expropriated, they will lose the value of the inventory. Therefore, bringing in goods only as needed can help reduce this risk.

Threat of Expropriation Creates an Incentive for the Multinational Firm