Considering the fact that many barriers to international portfolio investments have been dismantled in recent years,
A)capital market imperfections as a motivating factor for FDI are likely to become more important going forward.
B)capital market imperfections as a motivating factor for FDI are likely to become less relevant.
C)labor market imperfections as a motivating factor for FDI are likely to become less relevant.
D)none of the above

Question

Quizplus · Accepted Answer

If barriers to portfolio investments have been dismantled, it becomes easier for investors to diversify their portfolio internationally, reducing the need for FDI as a means of risk diversification. This means that capital market imperfections are likely to become less relevant as motivating factors for FDI.

Considering the Fact That Many Barriers to International Portfolio Investments