1. What is a market failure? Provide three examples of market failure and explain the role of the government in these cases.
2. Explain the relationship between the poor and environmental degradation.
3. .List and explain the potential benefits of foreign direct investment in developing countries.
Explanation & Answer
Running Head: Q AND A4
Q And A 4 Questions
Q and A 4 questions
Qn. 1: List and explain the potential benefits of foreign direct investment in developing
FDI has proved important to developing countries regardless of capital inflow or nature of
investment in a number of ways;
Foreign direct investment has proved resilient during financial crisis. For example,
large economic reversals were witnessed during 1997-98 East Asian financial crisis.
FDI enhances free cash flows that results to highest rate of return. First, the risk faced
by capital owners reduces and secondly, global integration results to best practices of
accounting, corporate governance and legal procedures.
Moreover, FDI encourages free technology transfer particularly new models of capital
inputs. This promotes domestic c...
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