Consider MNCs that produce products in the United States and export the products to developing countries. The MNCs could reduce their exposure to exchange rate risk if they set up their operations in the countries to which they export. Such a restructuring would cause a shift in expenses to the developing countries, and those expenses could be paid for with revenue earned in the same currency. Write a short essay in which you explain the practical limitations of this solution, which can help to explain why some MNCs do not pursue this strategy.
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