Practice 21

Question 1

Dependency theory

Answer 1

Emerging economies have practically no power in dealing with MNEs
- Governments use their powerful MNE to influence policies in emerging countries
- MNE use their home governments as instruments to improve their interests in emerging countries

Question 2

Examples key industries

Answer 2

• Transportation
• Mass Media
• Energy Production and Distribution
• Defense
• Healthcare

Question 3

Examples of limitations to prevent FDI

Answer 3

• Regulatory approvals for Foreign Investment
• Prohibition by law
• Golden shares
• Veto power

Question 4

Angolan O&G downstream law

Answer 4

allows only companies with at least 51% shareholding and control by Angolan citizens

Question 5

Government-owned airlines

Question 6

Russian State-Owned Company

Question 7

War in Ukraine and European sanctions

Question 8

Bargaining school theory

Answer 8

the terms for a foreign investors operations depend on how much the investor and host country need the others assets

Question 9

Benefits of not Limiting FDI

Answer 9

• MNEs have to adhere to local laws and regulations
• Local staff and executives have the power of influencing the strategy of the MNE
  in the host country
• FDI brings important liquidity for the country
• When privatizing companies in strategic sectors, often countries sell stakes in the stock market to spread the shareholder base as much as possible