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

Question

Quizplus · Accepted Answer

The threat of expropriation, or the government seizing a multinational firm's assets or properties, creates a risk that encourages firms to minimise their inventory holdings and avoid having too many goods or assets that could potentially be taken. This can help the firm prevent losses in the event of expropriation.

The Threat of Expropriation Creates an Incentive for the Multinational