1. With all other variables held constant, it is more likely for a firm to engage in vertical FDI in industries where the supply chains are longer (having more stages of production). 2. A U.S. firm will engage in horizontal FDI in Canada rather than in Bolivia since the size of the Canadian market is larger than the size of the Bolivian market. 3. Any advance in technology that increases horizontal FDI activity in the world, will reduce trade flows across countries. 4. Any advance in technology that increases vertical FDI activity in the world will also increase trade flows across countries.

5. Countries will always engage in horizontal FDI in remote countries to save on shipping costs. 6. The more different countries are in terms of endowments or technology, the more likely it is that firms can reduce the marginal cost of production by engaging in vertical FDI.

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