Practise tracing FDI through aggregate demand, productive capacity, jobs, technology and balance-of-payments flows and evaluating growth effects.
A multinational company (MNC) buys a manufacturing firm in a developing country that produces goods for the developing country's domestic consumers. The MNC then exports machinery and raw materials that it needs to the developing country.
What is the most likely consequence of this foreign direct investment (FDI) by the MNC on the balance of payments of the developing country?
current account
financial account
improves
improves
improves
worsens
worsens
improves
worsens
worsens
C