Match the List-I with List-II List-I (Theories of International Investment)List-II (Outline of Theory)…
Matching the theories of international investment (FDI) with their core propositions gives: (A) John Dunning's Eclectic (OLI) Theory -> IV (Three-tier framework of…
Choose your answer
Match the List-I with List-II
| List-I (Theories of International Investment) | List-II (Outline of Theory) |
|---|
| A. Eclectic Theory | I. FDI occurs largely in oligopolistic industries rather than in industries operating under near perfect competition |
| B. Appropriability Theory | II. Capital as an investment will move from countries where it is abundant to countries where it is scarce because the returns on investment opportunities are higher where capital is limited |
| C. Market Imperfection Theory | III. The firm should be able to keep the benefits resulting from its innovation & Research for its exclusive use |
| D. Theory of Capital Movements | IV. The framework follows three tiers-ownership, location and internalization, assuming that companies are not likely to follow through the FDI, if they can get the service or product internally and at lower costs |
Answer and explanation
Correct answer D
Matching the theories of international investment (FDI) with their core propositions gives: (A) John Dunning's Eclectic (OLI) Theory -> IV (Three-tier framework of Ownership, Location, and Internalisation advantages); (B) Stephen Magee's Appropriability Theory -> III (A firm invests abroad to keep the benefits of its proprietary innovation and R&D for its exclusive internal use); (C) Hymer-Kindleberger Market Imperfection Theory -> I (FDI occurs largely in oligopolistic industries with structural market imperfections rather than under perfect competition); and (D) Classical Theory of Capital Movements -> II (Capital moves from capital-abundant countries with low returns to capital-scarce countries with higher returns), i.e., A-IV, B-III, C-I, D-II.
Practice for these exams
-
UGC NET Commerce