153k views
0 votes
In an obsolescing bargain, an MNE receives greater incentives

from a foreign government after entering that market.
a.True
b.False

User Marc A
by
7.9k points

1 Answer

5 votes

Final answer:

An obsolescing bargain implies that a multinational enterprise's advantages and incentives decline over time as the host government gains more leverage, making the statement false.

Step-by-step explanation:

The concept of an obsolescing bargain suggests that the terms of an initial agreement between a multinational enterprise (MNE) and a foreign government tend to become less favorable to the MNE over time. This typically happens as the MNE's initial investments become more integrated into the host country's economy and the host government gains more leverage. Therefore, the statement that an MNE receives greater incentives from a foreign government after entering that market is false. Instead, the tendency in an obsolescing bargain is for incentives and other favorable terms to diminish as the foreign government's dependence on the MNE decreases.

User Kilian Obermeier
by
8.7k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.