Indirect effects of FDI on employment in a host country arise when
A)a foreign MNE employs a number of host-country citizens.
B)jobs are created because of increased local spending by employees of an MNE.
C)an MNE brings in managers from the home country for its operations in the host country.
D)an MNE recruits people from the host country for research and development.
E)an MNE sends home country employees to host countries for training.

Question

Quizplus · Accepted Answer

Indirect effects of FDI on employment in a host country can occur through increased local spending by employees of an MNE. When foreign companies invest in a host country, they create jobs for locals not only directly through their operations but also indirectly through the increase in local demand for goods and services generated by the additional income earned by their employees. This is known as the multiplier effect.

Indirect Effects of FDI on Employment in a Host Country