A firm's foreign direct investment.decisions are,in the case of horizontal FDI,strongly influenced by ________ and,in the case of vertical FDI,strongly influenced by ________.

Question

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Horizontal FDI refers to a multinational company investing in the same industry abroad that it operates in at home. In this case, trade costs (such as tariffs, transportation expenses, etc.) play a significant role because the firm is essentially exporting its products to another country. On the other hand, vertical FDI refers to a multinational company investing in different stages of the production process in another country. In vertical FDI, production costs (such as labor, energy, and other factors of production) are critical because the firm is looking to benefit from lower costs in the host country.

A Firm's Foreign Direct Investment