MODERN THEORIES OF FOREIGN DIRECT INVESTMENTS OVERVIEW OF THE MOST PROMINENT THEORIES

Abstract

Exploring the circumstances under which a nation begins to
trade outside its own borders, as well as the ways in which
international trade provides the necessary conditions for the
occurrence of FDI, classical and neoclassical theories of international
trade used to be indirectly concerned with the characteristics of FDI.
On the other hand, modern FDI theories, to which special attention
will be paid in this paper, explicitly speak of the occurrence of FDI, as
well as the incentives and determinants of FDI inflows in the host
country. By analyzing various modern theories, one finds the answer
to the question: Why does a company decide to invest beyond the
borders of its home country and why does it select a particular
country for its investment location, i.e. for its host country.