REQUIREMENT: EXAMPLE FOR EACH SLIDE WITH EXPLANATION

Theories of Foreign Direct Investment 2 Why Foreign Direct Investment? Two alternatives to FDI: - Exporting: producing goods at home and shipping to receiving country for sale. - Licensing: granting a foreign entity the right to produce and sell a rm's product in return for a royalty fee. FBI is expensive and risky compared with exporting and licensing. Theories of Foreign Direct Investment Why Foreign Direct Investment? continued Limitations of exporting: - Transportation costs and trade barriers. - By limiting imports through quotas and tariffs, governments increase the cost of exporting and boost the attractiveness of FDI and licensing