FDI vertical integration is backward
A)when FDI involves an industry abroad that produces inputs for MNCs.
B)when FDI involves an industry abroad that sells the MNC's outputs.
C)none of the options
D)when FDI involves an industry abroad that produces inputs for MNCs,as well as when FDI involves an industry abroad that sells the MNC's outputs.

Question

Quizplus · Accepted Answer

FDI vertical integration is backward when it involves an industry abroad that produces inputs for MNCs. This means that the MNC is investing in a foreign firm that will be supplying it with the necessary materials or components for its production process, rather than investing in a foreign firm that will be selling its finished products. This type of FDI is referred to as backward integration because the MNC is integrating backwards into its supply chain.

FDI Vertical Integration Is Backward