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Question

Foreign Direct Investment aims at
(i) increase in the total volume of investment in the economy.
(ii) improving production technology.
(iii) increase in access to world markets.
(iv) generating faster industrial growth.
Select the correct answer from the codes given below :

The correct answer is
(i), (ii), (iii) and (iv)

Understanding Foreign Direct Investment Aims

Foreign Direct Investment (FDI) refers to an investment made by a company or individual from one country into business interests located in another country. The primary objectives and outcomes of FDI are multifaceted.

Key Aims of FDI

  • Increase in Investment Volume: FDI directly injects capital into the host economy, thereby increasing the overall investment. This addresses statement (i).
  • Improving Production Technology: Foreign investors often bring advanced technologies, processes, and management expertise, leading to technological upgrades in the host country. This addresses statement (ii).
  • Expanding Market Access: FDI can facilitate access to international markets through the global networks and distribution channels of the investing company. This addresses statement (iii).
  • Accelerating Industrial Growth: By combining capital infusion, technological advancements, and enhanced market reach, FDI stimulates overall economic activity and promotes faster industrial development. This addresses statement (iv).

Conclusion

All the listed points - increase in total investment volume, improving production technology, increase in access to world markets, and generating faster industrial growth - are significant aims and consequences of Foreign Direct Investment.

Therefore, the correct option includes all four statements (i), (ii), (iii), and (iv).

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Important Questions from International Trade

  1. The Net Barter terms of trade refer to:

  2. A sudden shift from import tariffs to free trade may induce short‐term unemployment in:

  3. The theory which explains the effect of devaluation on balance of trade is known as:

  4. Which one of the following is not the disadvantage of international licensing?

  5. Which one of the following factor does not influence the flow of FDI under Demand factors?

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