Harton, a car manufacturer based in uk, only assembles cars and does not manufacture components in the uk. but in france, harton enters into components manufacturing through fdi. harton’s investment in france would be an example of a(n)

The correct answer is  upstream vertical FDI.

Explanation:

Foreign Direct Investment or FDI is an expenditure that a company carries out in order to start operations in a different country with the purpose of establishing new business operations or acquiring new assets for the company.

Along with the concept of FDI, we can identify horizontal and vertical FDI. The latest refers to the investment made by the company in foreign territories in order to replace the role of suppliers. Vertical FDI could be upstream or downstream. Upstream vertical FDI takes place when the financing is done for an earlier activity in the value chain of the production. Just like in the example, Harton -based originally in the U.K. for assembly only, decides to invest in France for manufacturing purposes (replace of suppliers who added value in the early production chain).

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