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Your assignment is to prepare and submit a paper on potential risks and advantages of investing in foreign subsidiaries. FDI has many advantages especially in the manufacturing sector because it leads to the uniting of capital, technology, and managerial and marketing skills. Most emerging countries are deficient in technological capability and FDI would facilitate technology transfer and trim down the technology gap between developing countries and industrial countries. According to Blomstrom (1989) “it is suggested that spillovers or the external effects from FDI are the most significant channels for the dissemination of modern technology.”

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