Question

<!--td {border: 1px solid #ccc;}br {mso-data-placement:same-cell;}--> Identify which of the following can be considered as a barrier to the entry of foreign capital.

• A. High trade barriers
• B. Rigid foreign investment policies
• C. Lack of capital
• D. Low trade barriers

Answer 1

Answer: (A), (B)

Rigid foreign investment policies

<!--td {border: 1px solid #ccc;}br {mso-data-placement:same-cell;}--> Globalization involves cross-border movement of capital, which takes place through foreign investments. However, it is only possible if the governments of countries make favourable foreign investment policies like reduction in trade barriers. This involves lowering taxes on imports and exports and removing restrictions on the entry of foreign capital.