What Two Factors Propel Growth in Foreign Direct Investment

question 44

Essay

What two factors propel growth in foreign direct investment?

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Definitions:

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent or salaries.

Total Fixed Costs

The sum of all costs that remain constant regardless of any change in a company's production volume.

Diminishing Returns

A principle stating that if one input in the production of a commodity is increased while other inputs are held fixed, a point will eventually be reached at which additions of the input yield progressively smaller, or diminishing, increases in output.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out.