Many host countries are concerned that a foreign-owned manufacturing plant may import many components from its home country,which has negative implications for the host country's
A)free trade agreements.
B)inward FDI.
C)sovereignty.
D)balance-of-payments position.
E)gold reserves.

Question

Quizplus · Accepted Answer

If a foreign-owned manufacturing plant imports many components from its home country, then the host country will have to pay for those components with its own currency, which could lead to a negative impact on its balance-of-payments position. This is because the host country will have to use up its foreign reserves or borrow money from other countries to pay for the imports, which can cause a deficit in its balance of payments.

Many Host Countries Are Concerned That a Foreign-Owned Manufacturing Plant