Why has FDI grown more rapidly than world trade?
A)The decline in trade barriers has erased the fear of protectionist pressures.
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 multinational enterprises.
E)There has been a general shift toward centrally planned command economies.

Question

Quizplus · Accepted Answer

FDI offers some advantages over international trade, such as a greater degree of control over production and distribution channels, and a reduced dependence on local partners. These advantages may be particularly attractive to firms that are concerned about the risk of future trade barriers, leading to a preference for FDI over international trade.

Why Has FDI Grown More Rapidly Than World Trade