Question

In: Economics

Hi,I need the fastest possible answer, I need solution for this issue with all the details...

Hi,I need the fastest possible answer, I need solution for this issue with all the details just nu .BR/Ha

Q. Answer whether the following examples of Foreign Direct Investment (FDI) describe horizontal or vertical FDI. Explain your answers.

a) Volvo builds a car factory in Austin, Texas, which is similar to Volvo’s factory in Gothenburg. The main purpose is to avoid US import tariffs.

b) H&M relocates production of its clothes from Sweden to Bangladesh to reduce wage costs. (5 points) c) Microsoft splits up its R&D department so that it no longer only has one in the US but also four new R&D departments in four additional countries.

d) Following Brexit, Honda splits its UK factory, which produces only for the European market, into one which remains in the UK and a new one in Germany.

e) Volkswagen’s location of production across countries such that each input in its value chain is produced in the location in the world where its quality-adjusted cost is the lowest.

Solutions

Expert Solution

Answer)

Vertical FDI is the investment by a multinational in an industry that is similar to the multinational.

Horizontal FDI is the investment by a multinational in an industry that is either an input to it's production or in an industry that sells products in foreign.

a) Volvo builds a car factory in Austin, Texas, which is similar to Volvo’s factory in Gothenburg. The main purpose is to avoid US import tariffs.

It is example of vertical FDI. Since investment is done to reduce input costs.

b) H&M relocates production of its clothes from Sweden to Bangladesh to reduce wage costs. (5 points)

It is example of horizontal FDI.

c) Microsoft splits up its R&D department so that it no longer only has one in the US but also four new R&D departments in four additional countries.

It's example of Vertical FDI.

d) Following Brexit, Honda splits its UK factory, which produces only for the European market, into one which remains in the UK and a new one in Germany.

It's example of vertical FDI.

e) Volkswagen’s location of production across countries such that each input in its value chain is produced in the location in the world where its quality-adjusted cost is the lowest.

It's example of vertical FDI since investment is for lower input costs.

If you have any doubts please comment...


Related Solutions

Hi,I need the fastest possible answer, I need solution for this issue with all the details...
Hi,I need the fastest possible answer, I need solution for this issue with all the details just nu .BR/Ha 1-Give an overview of the studies testing discrimination in education.
I need solution for this issue with all the details,if you can not solve this question,...
I need solution for this issue with all the details,if you can not solve this question, who should and I will send solve this question and help me with all the details? BR/Ha a) Suppose the annual interest rate is 10%. Would you prefer obtaining 1000 $ today or 1150 $ in a year from now? b) Assume that you are 18 years old and deciding whether to go to college or start working. If you work, you will earn...
I need solution for this issue with all the details,if you can not solve this question,...
I need solution for this issue with all the details,if you can not solve this question, who should and I will send solve this question and help me with all the details? BR/Ha Q.) State whether the following statements are true or false. Shortly explain your answer in 1-2 sentences. a) In the basic model of individual labor supply, if leisure is a normal good, an increase in non-labor in-come will reduce hours worked. b) In the basic model of...
I need solution for this issue with all the details,if you can not solve this question,...
I need solution for this issue with all the details,if you can not solve this question, who should and I will send solve this question and help me with all the details? BR/Ha Q. Consider a researcher interested in the causal effect of class size in primary school on educational attainments. The research strategies he is contemplating are (i) regression-control; (ii) randomization; (iii) difference-indifferences and (iv) regression-discontinuity. Explain the workings of each method along with the identification assumptions that enable...
Please I need solution for this issue with all the details .please you can write the...
Please I need solution for this issue with all the details .please you can write the answer typing and not write by hand,so that I can read and understand your answer clearly.I need step by step solution to the following this question asap. I would like a summary for this text below as the content is related to discrimination in the housing market. Discrimination in the housing market: Carlsson and Eriksson (2014) have carried out the most comprehensive field experiment...
I need solution for this issue with all the details./Br/Ha State whether the following statements are...
I need solution for this issue with all the details./Br/Ha State whether the following statements are true or false. Shortly explain your answer in 1-2 sentences. a) In a model with a perfectly competitive firm, if two input factors (e.g. employment and capital) are perfect complements, then a change in wages leads to a large substitution effect. b) In a simple model of labor demand with a competitive firm that uses capital and labor in production, the effect of a...
Hi I need the solution showing the work (in details) of this problem. Monthly sales at...
Hi I need the solution showing the work (in details) of this problem. Monthly sales at a coffee shop have been analyzed. The seasonal index values are Month Index Jan 1.38 Feb 1.42 Mar 1.35 Apr 1.03 May 0.99 June 0.62 July 0.51 Aug 0.58 Sept 0.82 Oct 0.82 Nov 0.92 Dec 1.56 and the trend line is 74123 + 26.9(t). Assume there is no cyclical component and forecast sales for year 8 (months 97 - 108).
I need solution for this issue with all the details./Br/Ha Nada Eissa and Jeffrey Liebman analysed...
I need solution for this issue with all the details./Br/Ha Nada Eissa and Jeffrey Liebman analysed an extension of the EITC that took place in 1987 in their study titled “Labor Supply Response to the Earned Income Tax Credit”. a) How did the study exploit the extension of the EITC? That is what was the empirical strategy? What is the main assumption when using this strategy? Do you think that this assumption was satisfied in the case here? b) What...
Hi I need the solution in details (show your work) Monthly sales at a coffee shop...
Hi I need the solution in details (show your work) Monthly sales at a coffee shop have been analyzed. The seasonal index values are Month Index Jan 1.38 Feb 1.42 Mar 1.35 Apr 1.03 May 0.99 June 0.62 July 0.51 Aug 0.58 Sept 0.82 Oct 0.82 Nov 0.92 Dec 1.56 and the trend line is 74123 + 26.9(t). Assume there is no cyclical component and forecast sales for year 8 (months 97 - 108).
I need your quick answer for this question with all the details a and b and...
I need your quick answer for this question with all the details a and b and c and d.Br/Ha a) Describe their findings about the evolution of income inequality over time. b) A key finding is that labor earnings have become more important over time as a share of total income among top-earners. How do the authors explain this finding? c) Can we interpret their explanation as causal evidence? Motivate your answer. d) Describe the three arguments for why economists...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT