A country with high unemployment could best increase its employment by: a. encouraging foreign firms to establish subsidiaries that produce the same products local firms produce. b. encouraging foreign firms to establish licensing arrangements for products local firms produce. c. encouraging foreign firms to establish subsidiaries that produce products local firms do not produce. d. none of the above would reduce employment.

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Business

Trevor

25 December, 09:08

A country with high unemployment could best increase its employment by: a. encouraging foreign firms to establish subsidiaries that produce the same products local firms produce. b. encouraging foreign firms to establish licensing arrangements for products local firms produce. c. encouraging foreign firms to establish subsidiaries that produce products local firms do not produce. d. none of the above would reduce employment.

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Maggie · Answer 1

C) encouraging foreign firms to establish subsidiaries that produce products local firms do not produce.

Explanation:

Foreign direct investment is a very efficient way of increasing employment. Usually countries with high unemployment are going through a recession, so that means local prices are down due to low income levels (private consumption is by far the largest component of GDP). Since the costs of operating in that country are low, it becomes an attractive target for foreign direct investment.