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Which of the following is an example of foreign direct investment?Group of answer choicesFord Motor Company builds an automobile factory in Argentina.Citicorp makes a loan to the Costa Rican government.A Nigerian ship-owner obtains insurance from Lloyd’s of London.Grameen Bank provides microloans to small weaving cooperatives in Bangladesh.

Question

Which of the following is an example of foreign direct investment?Group of answer choicesFord Motor Company builds an automobile factory in Argentina.Citicorp makes a loan to the Costa Rican government.A Nigerian ship-owner obtains insurance from Lloyd’s of London.Grameen Bank provides microloans to small weaving cooperatives in Bangladesh.

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Solution

The example of foreign direct investment among the options given is: "Ford Motor Company builds an automobile factory in Argentina."

Here's why:

Foreign Direct Investment (FDI) refers to an investment made by a firm or individual in one country into business interests located in another country. Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company.

In the given options, Ford Motor Company building an automobile factory in Argentina is a direct investment in business operations in a foreign country, hence it is an example of FDI.

The other options involve loans, insurance, and microloans, which are not examples of FDI. They are forms of indirect investment, as they do not involve a direct investment in foreign operations.

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