I.

GAP FILLING
1. If a country can produce something more cheaply than anywhere else in the world, it
has a (an) absolute advantage.
2. A country exporting more than it imports has a trade surplus.
3. Autarkey is the (impossible) situation in which a country is completely self-sufficient
and has no foreign trae.
4. Countries that export a lot of oil or manufactured goods tend to have a positive
balance of trade.
5. The WTO has established rules for trade between nations.
6. Balance of payment is the difference between what a country pays for all its imports
and receives for all its exports.
7. Many economists encourage governments to abolish import taxes and have complete
free trade.
8. Exporting and importing are two aspects of foreign trade: a country spends money on
goods it imports and gains money through its exports.
9. Unlike qoutas, tariffs produce revenue
II. Q&A
1. What brings the absolute advantage or comparative advantage to a country?
- Abundant natural resources and materials
- Cheap labour
- Technology
- Technical expertise
2. What are the reasons for imposing tariffs?
- Protect domestic companies/infant industry
- Protect domestic jobs
- Generate revenue for the gov
- Reduce BOP deficits
- Protection against dumping
- Make imports more expensive than home-produced subsidy.
5. What is the difference between the balance of trade and balance of payment?
- Balance of trade: includes imports and exports of visible goods
- Balance of payment: considers all transactions with other countries, including import
and export of goods and services and money earned from and paid for services and
investment.
6. Why would government impede free trade?
7. What are the methods used by the government to restrict trade?
8. Explain the different ways of promoting international trade?
-> SLIDES
I. GAP FILLING
1. A cash grant is called investment incentive, whose purpose is to attract FDI.
2. Most companies give foreign countries tax incentive to attract investment.
3. What kind of return can I expect on my investment?
II. Q&A
1. What are the difference between FDI and FPI?
-> SLIDES
2. What are some financial considerations in making a foreign direct investment?
- Return on investment
- Costs of production
- Investment Incentives/Financial Incentives
- Exchange rates
- Cash flow
- Sources of working capital
3. What are the important management issues in the FDI decision?
Answer: 6
- Control
- Purchase or build decision
- Production costs
- Customer Knowledge
- Following Rivals
4. For what reason do host countries intervene in FDI?
- To protect BOP
- To obtain reéources and benefits
5. For what reasons do home countries intervene FDI?
- Sending resources out of the home country, lowering the BOP
- Damaging BOP by taking place of its exports
- Jobs
6. What are the methods used by host countries to restrict and promote FDI?
-> SLIDES
7. What are the methods used by host countries to restrict and promote FDI?
-> SLIDES
III. ESSAY-WRITING
1. What are the advantages and disadvantages of FDI in Vietnam?
- Creation of Jobs
- Access to high technology, advanced business practices, global management styles, new
economic concepts
- Increase GDP
- Boost BOP
- Tax revenue
- Capital inflow
- Competition with local business
- BOP may decrease when direct investors return profits mae locally back to their home
country.
- Environment/Ecosystem
- Local resources are vulnerable to overexploitation by foreign firms.
2. Is FDI always a good things?
3. Why do certain countries attract more FDI than others?