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Explain the link between the strong comparative advantage of the US and high levels of outward...

Explain the link between the strong comparative advantage of the US and high levels of outward foreign direct investment FDI in business services industries including engineering, finance, and telecommunication.

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Ans. Due to the strong Comparative Advantage of US , producing goods at a lower opportunity cost than others , but in order to go for labor intensive work , US companies outsource their work to the countries having cheap labor and often invest in those countries to perform activities involving direct human link for eg : Engineering , Finance and Telecommunication. Thereby increasing the FDI to those countries . US is a resource rich country focused heavily on tech and therefore investing in other countries brings more returns to the home countries.Thus increased comparative advantage increases the FDI outflow of the US in search of more Opportunities.

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