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Practice mode Balance of Payments, Aid and Foreign Investment

Columbia’s Jagdish Bhagwati criticises US administrations for failing to distinguish between the benefits of free trade and what?

Correct answer B. The dangers of free capital movements for LDCs with poorly developed financial institutions

Explanation

Bhagwati supports free trade but warns that free capital movements can trigger crises in developing countries with weak financial institutions, so the two should not be treated alike.

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Question 03 Balance of Payments, Aid and Foreign Investment

Which of the following is commonly cited as a benefit that MNCs can bring to a developing country?

Correct answer B. Helping to finance a savings gap or balance of payments deficit

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Question 04 Balance of Payments, Aid and Foreign Investment

Critics argue that MNCs harm developing countries because they: I. increase technological dependence on foreign sources; II. hamper local entrepreneurship and infant industries; III. raise unemployment through unsuitable technology; IV. restrict subsidiary exports that undercut the parent. Which are cited?

Correct answer C. All of I, II, III and IV

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