Theoretical Framework of Foreign Direct Investment


Stroget, Copenhagen, Denmark*



This chapter discusses the motivation for FDI in what forms it occurs, and what impact it leaves on the home and host countries both at the economy’s level and at the firm’s level. The chapter discusses also how the MNCs’ operations should be controlled so as to minimise the cost of FDI. In particular, the objectives are to:

  • Discuss various theories of FDI.
  • Show how different theories of FDI are applicable in case of FDI from developing countries.
  • Analyse the benefits and costs of FDI from the viewpoint of both the home country and the ...

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