A multinational company (MNC) acquires a manufacturing firm in a developing country that makes goods for consumers in the developing country’s home market. The MNC then sends in machinery and raw materials that it requires to the developing country. What is the most likely effect of this foreign direct investment (FDI) by the MNC on the balance of payments of the developing country?
- Acurrent account improves; financial account improves
- Bcurrent account improves; financial account worsens
- Ccurrent account worsens; financial account improves
- Dcurrent account worsens; financial account worsens