&8226;Read this text about FDI.&8226;Choose the best sentence from the sentences that foll
&8226;Read this text about FDI.
&8226;Choose the best sentence from the sentences that follow to fill each of the gaps.
&8226;For each gap 9-14, mark one letter (A-H) on your Answer Sheet.
？ Do not use any letter more than once.
Advantages of FDI
Companies invest directly only if they think that they hold some supremacy over similar companies in countries of interest. The advantage results from a foreign company's ownership of some resources--patents, product differentiation, management skills, access to markets--unavailable at the same price or terms to the local company. This is known as monopoly advantages before direct investment. The cost of transferring resources abroad is increasing and there is perceived greater risk of operating in a foreign country. (9) . Companies from certain countries may enjoy a monopoly advantage if they borrow capital at a lower interest rate than companies from other countries. In recent years, capital markets have become international, so it is possible for companies to borrow abroad more easily if interest rates are lower there.
(10) . Currency values, however, do not provide a strong explanation for FDI patterns. The currency-strength scenario only partially explains direct investment flows. More internationally oriented companies can get advantage from spreading out some of the costs of product differentiation, R & D, and advertising compared to less internationally oriented companies. Among industry groups and groups of companies of similar size that spent comparable amounts on advertising and R & D, the more internationally oriented companies in almost every case earned more than the others.
(11) Besides, with inflow of equipment, the skills of local worker can be improved. New management can also be introduced to the local companies to improve the administration of the enterprises of the local management.
From the perspective of a nation, FDI may bring some benefits. FDI can make a positive contribution to a host economy by supplying capital, technology, and management resources that would otherwise not be available. The provision of these skills by an MNE (through FDI) may boost that country's economic growth rate. (12) . Technology is a catalyst that can stimulate a country's economic growth and industrialization. Technology can take two forms, both of which are valuable. It can be incorporated in a production process (e. g., the technology for discovering, extracting, and refining oil). However, many countries lack the research and development resources and skills required to develop their local product and processing technology. (13) . Such countries need rely on advanced industrialized nations for much of the technology required to stimulate economic growth, and FDI can provide it.
Foreign management skills provided through FDI may also produce important benefits for the host countries. Beneficial spinoff effects arise when local personnel who are trained to occupy managerial, financial, and technical posts in the subsidiaries of a foreign MNE subsequently leave the firm and help to establish local firms. (14) .
A. Besides, new advanced technology can be introduced to the host country.
B. On the other hand, local companies can enjoy the advanced technology which they lack.
C. Therefore, a company will not undertake FDI if it does not see a higher return than it can get at home country and if it does not think it can outperform. local firms.
D. FDI is especially important to developing countries.
E. This is particularly true of the less developed countries (LDCs).
F. Likewise, benefits may arise if the superior management skills of a foreign MNE stimulate local suppliers, distributors, and competitors to improve their own management skills.
G. Another adv
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