Question

which of the following scenarios represents one of the adverse effects of fdi on a host country's balance-of-payments position? question 11 options: when a foreign subsidiary exports a substantial amount of its outputs abroad. when a foreign subsidiary gets a substantial amount of its inputs from its host country. when most of the foreign subsidiary's management team is from the host country. when the parent company imports a substantial amount of its inputs from its foreign subsidiary in a host country. when the foreign subsidiary repatriates earnings to its parent company.

Answer 1

One adverse effect of FDI on a host country's balance-of-payments position is when the foreign subsidiary repatriates earnings to its parent company.

Step-by-step explanation:

One of the adverse effects of foreign direct investment (FDI) on a host country's balance-of-payments position is when the foreign subsidiary repatriates earnings to its parent company.

This means that the profits made by the foreign subsidiary are sent back to the parent company in another country. This outflow of funds reduces the host country's balance of payments, as it represents a negative inflow of foreign currency.

For example, if a foreign subsidiary in a host country earns $1 million in profits and sends that money back to its parent company, it will lead to a decrease in the host country's foreign reserves and can negatively impact the overall balance of payments.