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What are the two main types of FDI? (Check all that apply.)

a) Horizontal FDI
b) Vertical FDI
c) Inward FDI
d) Outward FDI

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Final answer:

The two main types of FDI are Horizontal FDI and Vertical FDI, which refer to establishing the same type of business operations or expanding along the supply chain in a foreign country, respectively.

Step-by-step explanation:

The two main types of FDI are Horizontal FDI and Vertical FDI.

Horizontal FDI refers to when a company establishes the same type of business operations in a foreign country as it does in its home country. For example, if a U.S. automobile manufacturer sets up a factory in China to produce cars, it would be considered horizontal FDI.

Vertical FDI, on the other hand, involves a company expanding its operations along the supply chain in a foreign country. This can include forward integration, where a company invests in distribution or retail activities, or backward integration, where a company invests in raw material production or supplier activities. An example of vertical FDI would be a U.S. technology company investing in a factory in Taiwan to produce electronic components.

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