Intro

Beltland is a small country trading with the U.S.. Its currency, the belt, is expected to depreciate against the dollar over the next few years. The country imposes high tariffs on imports, but does not have any import quotas. The cost of labor and raw materials is high in Beltland, due to its lack of natural resources and high GDP. The country focuses mainly on R&D and production of medical equipment and drugs, in which it is considered world-class.

Part 1

What are valid reasons for a U.S. pharmaceutical corporation for opening a manufacturing subsidiary in Beltland?

Check all that apply:

- Circumvent trade restrictions

- Use foreign technology

- Exploit expected exchange rate movements

- Exploit economies of scale

- Benefit from lower costs