How does increased competition through FDI in the form of greenfield investments impact the host country?
A)It drives down prices and increases the economic welfare of consumers.
B)It raises retrenchments and unemployment levels.
C)It causes firms to fight for scarce capital investments.
D)It leads to a monopolistic market and unfair pricing.

Question

Quizplus · Accepted Answer

The efficient functioning of markets depends on an adequate level of competition between producers.When FDI takes the form of a greenfield investment,the result is to establish a new enterprise,increasing the number of players in a market and thus consumer choice.In turn,this can increase the level of competition in a national market,thereby driving down prices and increasing the economic welfare of consumers.

How Does Increased Competition Through FDI in the Form of Greenfield