Suppose an American buys stock issued by an Argentinian corp

Suppose an American buys stock issued by an Argentinian corporation. The Argentinian firm uses the proceeds from the sale to build a new office complex. This is an example of foreign investment in Argentina. Which of the following policies are consistent with the goal of increasing productivity and growth in developing countries? Check all Chat apply. Provide tax breaks and patents for firms that pursue research and development in health and sciences. Give families cash payments on the condition that their children show up for school and medical exams. Increase taxes on income from savings. Protect property rights and enforce contracts. In less developed countries, what does the brain drain refer to? Rapid population growth that lowers the stock of capital per worker Lower productivity due to a malnourished workforce The emigration of highly skilled workers to rich countries Rapid population growth that increases the burden on the educational system

Solution

1) Foreign Portfolio Investment
When a foreign entity invests in productive assest such setting up a factory then it is called as a FDI.
However, when investment is done in financial assets such as stocks or bonds then it known as FPI.
Above mentioned scenario classifies as FPI.

2) Option a,b and d
All the option except c will encourage R&D, innovation in the long run in the economy.
Tax breaks and defining intellectual property rights will give financial and legal boost respectively.

3) Bureaucracy and red tapism often stifles innovation and wealth creation in the economy.
This actually discourages skilled people who could monetize their skills so they choose to emigrate to rich countries where their skills will be valued. This phenomena is called as brain drain.