Most foreign investment is today is directed towards high-income countries because
A)there are tax breaks and subsidies available.
B)markets are larger, so transportation costs are minimized by producing near the market.
C)high-income countries are politically stable.
D)there are no economies of scale in low-income countries.

Question

Quizplus · Accepted Answer

Markets in high-income countries are larger, so producing near the market minimizes transportation costs. This is a more attractive option for foreign investment as it results in cost savings and improved competitiveness. Tax breaks and subsidies may also be available, but they are not the primary reason why investment flows towards high-income countries. Political stability is important, but not the only factor, and there may be economies of scale in low-income countries as well.

Most Foreign Investment Is Today Is Directed Towards High-Income Countries