Why has FDI grown more rapidly than world trade? Multiple Choice The decline in trade barriers has erased the fear of protectionist pressures. Executives of business firms see FDI as a way of circumventing future trade barriers. There has been a general shift toward radical and totalitarian political institutions. Privatization has made developing nations less attractive for multinational enterprises. There has been a general shift toward centrally planned command economies.

A foreign direct investment refers to the investment in commercial interests based in some other nation made by a company or person in one nation. In particular, FDI happens when an entity develops international business activities or obtains overseas business resources within a foreign corporation.

This method of business has gained popularity over the years as trade barriers have been loosens up by nations seeing their growth in economy and living standards.