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Why Do Many Economists Favor Internalization Theory as an Explanation

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Essay

Why do many economists favor internalization theory as an explanation for FDI compared to Knickerbocker's theory?


Definitions:

Taxes

Mandatory financial charges or levies imposed by a government on individuals or organizations to fund public expenditures.

Transfers

Movements of resources, goods, or funds from one place, person, or entity to another, often without receiving something in return.

Households

Units of individuals living together, making decisions regarding consumption, savings, and investments, playing a key role in the economic system.

Total Income

The sum of all earnings received by an individual or entity, including wages, salaries, and investment returns.

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