Foreign direct investment is most likely to be economically viable in those settings where
A)possible contractual difficulties make it costly to coordinate economic activities via arm's length transactions in the marketplace
B)a firm is interested in accessing low-cost resources overseas
C)a firm is interested in selling its patented products abroad
D)the local government is most corrupt

Question

Quizplus · Accepted Answer

Foreign direct investment is often pursued when there are potential contractual difficulties that make it costly to coordinate economic activities through market transactions, as it allows firms to have more control over operations and reduce transaction costs.

Foreign Direct Investment Is Most Likely to Be Economically Viable