When FDI occurs, what are the longrun effects of FDI on industry output in the recipient nation?
a. There is no change in either the output of the capitalintensive or the laborintensive industry.
b. The laborintensive industry expands; the capital intensive industry contracts.
c. The capitalintensive industry expands; the labor intensive industry contracts.
d. Both capital and laborintensive industries expand in the same proportion.
Answer: c. The capitalintensive industry expands; the labor intensive industry contracts.
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