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Which of the following statements regarding FDI is NOT true? Select one: a. The liberalisation of the global economy has contributed to the growth of FDI b. Mergers and acquisitions tend to be more common in developed nations c. Exporting and licensing afford greater control than greenfield investments d. Mergers and acquisitions are generally quicker to execute than greenfield investments

Question

Which of the following statements regarding FDI is NOT true?

Select one:

a. The liberalisation of the global economy has contributed to the growth of FDI

b. Mergers and acquisitions tend to be more common in developed nations

c. Exporting and licensing afford greater control than greenfield investments

d. Mergers and acquisitions are generally quicker to execute than greenfield investments

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Solution

The statement that is NOT true regarding FDI (Foreign Direct Investment) is:

c. Exporting and licensing afford greater control than greenfield investments

Explanation:

a. The liberalisation of the global economy has indeed contributed to the growth of FDI. This is because liberalisation often involves removing restrictions on foreign investments, thus encouraging more FDI.

b. Mergers and acquisitions are indeed more common in developed nations. This is because these nations often have more mature markets that are attractive to foreign investors.

c. This statement is not true. Greenfield investments, which involve starting a new venture from scratch in a foreign country, typically afford the investor more control than exporting and licensing. This is because the investor has full control over the new venture and does not have to share control with a local partner, as is often the case with exporting and licensing.

d. Mergers and acquisitions are generally quicker to execute than greenfield investments. This is because greenfield investments involve building a new venture from the ground up, which can take a significant amount of time. In contrast, mergers and acquisitions involve taking over an existing business, which can often be done more quickly.

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