A rationale for foreign direct investment is that, in the face of trade barriers, firms located in a country with a relative abundance of capital can gain from exporting capital to nations with a relative abundance of labor.

Question

Quizplus · Accepted Answer

Foreign direct investment can be a strategy for firms to take advantage of lower labor costs in other countries while avoiding trade barriers that may exist. By exporting capital to these countries, firms can establish operations there and tap into their relative abundance of labor. This can lead to cost savings and increased competitiveness for the firm.

A Rationale for Foreign Direct Investment Is That, in the Face