Foreign direct investment may be an attempt by foreign companies to establish competitive advantage over potential competitors in other markets, due to possession of advantages not available to local firms. Such advantages possessed by foreign companies over their local competitors include knowledge about local market conditions and cost efficiencies from operating at a distance.

Question

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Foreign direct investment (FDI) often involves foreign companies leveraging their own unique advantages, such as advanced technology, management expertise, or brand recognition, rather than advantages stemming from knowledge about local market conditions or cost efficiencies from operating at a distance. These unique advantages help them establish a competitive edge in the new market.

Foreign Direct Investment May Be an Attempt by Foreign Companies