Scenario: Happyland
Happyland is a country characterized by beautiful beaches, vast natural resources, and a highly skilled labor force. Happyland is now encouraging foreign direct investment flows. The country has been exporting textiles, computer hardware, and software programs. The net result of the trade is that Happyland exports far more goods and services and receives more income from abroad than it imports and pays abroad.
-Which of the following methods will Happyland use to encourage foreign direct investment inflows?

Question

Quizplus · Accepted Answer

Happyland is encouraging foreign direct investment flows, and one method to attract these flows is by offering tax incentives to investors. This could include tax holidays, reduced tax rates, or exemptions from certain taxes. These incentives reduce the cost of investment and increase the return on investment, making Happyland a more attractive destination for foreign investors. Sanctions and ownership restrictions would discourage foreign investment, and performance demands would increase the cost of investment.

Scenario: Happyland Happyland Is a Country Characterized by Beautiful Beaches, Vast Natural