A multinational company (MNC) based in Germany opens a new manufacturing plant in Vietnam. Which of the following is most likely to be a benefit to Vietnam's economy?

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Question

A multinational company (MNC) based in Germany opens a new manufacturing plant in Vietnam. Which of the following is most likely to be a benefit to Vietnam's economy?

Accepted Answer

Transfer of technology and management skills — Award 1 mark for identifying technology and skills transfer as a key benefit of FDI to developing economies. A is incorrect — this would affect Germany, not Vietnam. B is incorrect — FDI typically creates employment, not unemployment. D is incorrect — this relates to German currency and would not directly benefit Vietnam's economy.

Answer

Appreciation of the German euro

Answer

Increased competition for domestic firms in Germany

Answer

Transfer of technology and management skills

Answer

Higher unemployment in the manufacturing sector

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