Which of the following methods is used by a host country to restrict incoming foreign direct investment?
A) differential tax rates for earnings abroad
B) insurance to cover the risk of overseas investments
C) low-interest loans to investors
D) performance demands

Question

Quizplus · Accepted Answer

Performance demands are used by host countries to restrict incoming foreign direct investment by setting performance targets for the investors, such as job creation, technology transfer or export promotion. If the investors fail to meet these targets, their investment may be restricted or terminated. This method is often used by developing countries to ensure that FDI contributes to their economic development. Differential tax rates for earnings abroad, insurance, and low-interest loans are measures that encourage or facilitate FDI, rather than restrict it.

Which of the Following Methods Is Used by a Host