What Is Meant by the Term Foreign Direct Investment? Describe

question 48

Essay

What is meant by the term Foreign Direct Investment? Describe the difference between the flow of foreign direct investment and the stock of foreign direct investment.

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Definitions:

Comparative Advantage

A concept in economics that refers to a country's ability to produce goods and services at a lower opportunity cost than that of trade partners.

Domestic Opportunity Cost

The opportunity cost of producing goods domestically rather than importing them, measured by what is given up in the domestic production of other goods.

Capital-Intensive Products

Products that require a high amount of capital investment in machinery and equipment relative to labor input in their production process.

Capital Resources

Assets such as machinery, tools, and buildings that are used in the production of other goods and services.