Question

What is the connection, if any, between comparative advantage (CA) and foreign direct investment (FDI)? Nothing. CA has nothing to do with FDI. Countries often engage in FDI in industries where the country they invest in has a comparative disadvantage. Countries often engage in FDI in industries where the country they invest in has a comparative advantage. When a country's firms invest abroad, this helps to create CA in the same industry at home.

Answer 1

Answer: When a country's firm invests abroad, this helps to create CA in the same industry at home.

Explanation:

Comparative advantage is an economic term which refers to the ability of an economy to produce goods and services at lower opportunity cost than its trade partners.

The connection between comparative advantage (CA) and foreign direct investment (FDI) is that when a country's firm invests abroad, it helps to create comparative advantage in the same industry at home. Since a two-sided remote direct venture will have an effect on the correspondence of the relatively favorable position among the host and the source countries.