Question

When foreign direct investment takes the form of a greenfield investment, this drives down prices and

a. increases the economic welfare of consumers.
b. raises unemployment levels.
c. causes firms to fight for scarce capital investments.
d. leads to decreased productivity, product and process innovations, and lesser economic growth.
e. leads to an oligopolistic market and unfair pricing.

Answer 1

c. causes firms to fight for scarce capital investments.

Step-by-step explanation:

"As with any startup, green-field investments entail higher risks and higher costs associated with building new factories or manufacturing plants. Smaller risks include construction overruns, problems with permitting, difficulties in accessing resources and issues with local labor.

Companies contemplating green-field projects typically invest large sums of time and money in advance research to determine feasibility and cost-effectiveness."

Reference: Chen, James. “Why a Green-Field Investment Appeals to Companies.” Investopedia, Investopedia, 2 Sept. 2019