Help! which one?!
8. All of the following are types of foreign direct investment (FDI) except _____.
a foreign company merges with an existing firm in a less developed country (LDC)
a foreign company takes over a firm in an LDC
a foreign company enters into a partnership with a firm in an LDC
a foreign company buys stock in a firm in an LDC and helps the company build a new plant
To determine the correct answer, we need to understand what foreign direct investment (FDI) means. FDI refers to the investment made by a company or individual from one country into a business in another country. It typically involves the establishment of a new company or the acquisition of an existing business. FDI can take various forms, such as mergers, acquisitions, partnerships, and stock purchases.
Now, let's examine the options:
a) A foreign company merges with an existing firm in a less developed country (LDC) - This is a type of FDI where two companies combine to form a new entity. This is a valid form of FDI.
b) A foreign company takes over a firm in an LDC - This is another form of FDI where a foreign company acquires full control of a business in a less developed country. This is a valid form of FDI.
c) A foreign company enters into a partnership with a firm in an LDC - This is yet another valid form of FDI where a foreign company and a local firm collaborate and share ownership in a business.
d) A foreign company buys stock in a firm in an LDC and helps the company build a new plant - This is also a form of FDI known as a greenfield investment, where a foreign company invests in a local firm by purchasing its stocks and also provides support for the construction of a new plant.
Based on the explanations above, all of the given options are types of foreign direct investment (FDI). Therefore, none of them can be excluded as the correct answer.