Which of the following statements is true regarding foreign direct investment?
A)The flow of FDI refers to the total accumulated value of foreign-owned assets at a given time.
B)FDI has grown more rapidly than world trade and world output.
C)The general shift toward democratic political institutions has discouraged FDI.
D)Generally,free market economies oppose FDI.
E)The globalization of the world economy is having a negative effect on the volume of FDI.

Question

Quizplus · Accepted Answer

FDI has indeed grown at a faster rate than world trade and output. The other answer choices are incorrect. The flow of FDI refers to the value of FDI in a given period, not the total accumulated value at a given time. The shift toward democratic institutions has actually encouraged FDI as it provides greater stability and protection for foreign investors. While there may be opposition to FDI in some countries, it is not true that free market economies generally oppose it. Finally, there is no evidence to suggest that the globalization of the world economy is having a negative effect on the volume of FDI.

Which of the Following Statements Is True Regarding Foreign Direct