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A country would likely be an attractive target for direct foreign investment by MNCs to expand...

A country would likely be an attractive target for direct foreign investment by MNCs to expand their sales, if the country is has a high unemployment rate and low income level.

True

False
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Answer #1

Answer: False

High unemployment rate and low income level indicate that the people in the country do not have much purchasing ability. This creates poor market structure. In this market, sales expansion cannot be possible. The purpose of FDI may not be fruitful there in the current situation.

FDI could only be fruitful if the target is to making products (instead of expanding sales) at low labor cost. Since the unemployment rate is high, the labor factor is cheaply available there.

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