Which of the following is one of the limitations of exporting that leads companies to prefer FDI over exporting?
A)The presence or threat of trade barriers
B)The costs of acquiring a foreign enterprise
C)The costs of establishing production facilities in a foreign country
D)The risk of giving away valuable technological know-how to a potential foreign competitor
E)The possibility of diminishing returns

Question

Quizplus · Accepted Answer

Some firms undertake foreign direct investment as a response to actual or threatened trade barriers such as import tariffs or quotas. The desire to reduce the threat that trade barriers might be imposed is enough to justify foreign direct investment as an alternative to exporting.

Which of the Following Is One of the Limitations of Exporting