The free market view argues that international production should be distributed among countries according to the
A) eclectic paradigm.
B) theory of competitive advantage.
C) new trade theory.
D) theory of comparative advantage.

Question

Quizplus · Accepted Answer

The intellectual case for the free market view has been strengthened by the internalization explanation of FDI. The free market view argues that international production should be distributed among countries according to the theory of comparative advantage. Countries should specialize in the production of those goods and services that they can produce most efficiently. Within this framework, the MNE is an instrument for dispersing the production of goods and services to the most efficient locations around the globe. Viewed this way, FDI by the MNE increases the overall efficiency of the world economy.

The Free Market View Argues That International Production Should Be