In which way can the home country's balance of payments benefit from FDI made in a foreign country? Select one: a. From cash outflow during the initial investment to finance the FDI b. From the inward flow of foreign earnings c. If FDI is a substitute for direct exports d. From the outward flow of foreign earnings

The home country's balance of payments can benefit from Foreign Direct Investment (FDI) made in a foreign country in several ways. However, based on the options provided:

a. From cash outflow during the initial investment to finance the FDI - This is not a benefit to the balance of payments as it represents a cash outflow from the home country.

b. From the inward flow of foreign earnings - This is correct. When a home country company invests in a foreign country, the profits (or dividends) that are repatriated back to the home country are considered an inward flow of foreign earnings. This increases the credit side of the current account in the balance of payments, thus benefiting the home country's balance of payments.

c. If FDI is a substitute for direct exports - This could potentially benefit the balance of payments, but it is not a direct benefit. If FDI is used as a substitute for direct exports, it could lead to an increase in the production and export of goods and services from the home country, which could improve the balance of payments. However, this is not a direct benefit from FDI.

d. From the outward flow of foreign earnings - This would not benefit the balance of payments as it represents a cash outflow from the home country.

So, the correct answer is b. From the inward flow of foreign earnings.