Why has FDI grown more rapidly than world trade?
A)Decline in trade barriers has made the fear of protectionist pressures redundant.
B)Executives of business firms see FDI as a way of circumventing future trade barriers.
C)There has been a general shift toward radical and totalitarian political institutions.
D)Privatization has made developing nations less attractive for MNEs.

Question

Quizplus · Accepted Answer

Despite the general decline in trade barriers over the past 30 years,business firms still fear protectionist pressures.Executives see FDI as a way of circumventing future trade barriers.Much of the increase in FDI has been driven by the political and economic changes that have been occurring in many of the world's developing nations.The general shift toward democratic political institutions and free market economies has encouraged FDI.These factors have helped FDI grow more rapidly than world trade.

Why Has FDI Grown More Rapidly Than World Trade