Explain and answer and also give examples of the questions b

Explain and answer and also give examples of the questions below woth your own words.

1)Recently, many foreign firms from both developed and developing countries acquired high-tech U.S. firms. What might have motivated these firms to acquire U.S. firms?

2)How would you explain the fact that China emerged as one of the most important recipient of FDI in recent years?

Solution

Answer:

1)

There are many factors which motivated firms from developed and developing world to acquire U.S. firms. Two of which are as below-

a. To acquire the lucrative American market. Acquisition of the American company Smithfield Foods by Chinese corporation is of the examples of this.

b. To access the advanced technologies which American companies are using. These technologies can be transferred to other companies within the control of the acquirer company.

2)

Although global FDI flows fell by 13% year-on-year in 2016, China received an increase of 2.3% FDI inflow. This is happening particularly due to the fact that it is cheaper to produce goods in China as compared to any other parts of the world. Global investors have also shown a good interest in the Chinese service industry because of the development of new and advanced technologies in China. In addition, China managed to attract more investment due to its attractive policies with regard to FDI inflows.