Answer to Question #79661 in Finance for Justin Jian Hui Lam

Question

Opportunities in Less Developed Countries. Offer your opinion on why economies of some less developed countries with strict restrictions on international trade and FDI are somewhat independent from economies of other countries. Why would MNCs desire to enter such countries? If these countries relaxed their restrictions, would their economies continue to be independent of other economies? Explain.

Answer 1

Strict restrictions on international trade and FDI in some of the least developed countries form a certain autonomy from the economies of other countries. That is, open business in such countries will be isolated from existing business cycles in other countries. Accordingly, the total INN cash flow can be more stable. On the other hand, restrictions can be a significant barrier to entering a business in such a country. With the easing of restrictions on the conduct of international trade will lead to a weakening of isolation from the external economic world.