Why Do Many Economists Favor Internalization Theory as an Explanation

question 62

Essay

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

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Definitions:

Multinational Firm

A company that operates in multiple countries, managing production or services in more than one country outside of its home country.

TN Visa

A type of visa under the North American Free Trade Agreement (NAFTA) that allows citizens of Canada and Mexico to work in the United States in prearranged business activities for U.S. or foreign employers.

NAFTA

North American Free Trade Agreement, a treaty between Canada, Mexico, and the United States that eliminated most tariffs and trade barriers between the countries.

Qualified Canadian Professionals

Individuals in Canada who possess the necessary skills, credentials, and experience to meet the standards of their profession.