If foreign firms send profits back to their industrial countries from the developing countries, developing countries will have a larger deficit on their balance of payments accounts.

Question

Quizplus · Accepted Answer

When foreign firms send profits back to their industrial countries from developing countries, it implies that the profits earned in the developing countries are leaving the countries and transferring to another country. This can lead to a decrease in foreign exchange reserves, affecting the balance of payments accounts of developing countries. Thus, it is true that if foreign firms send profits back to their industrial countries from developing countries, developing countries will have a larger deficit on their balance of payments accounts.

If Foreign Firms Send Profits Back to Their Industrial Countries