Even though FDI location is influenced by the firm behaviour (a microeconomic factor) as the reasons of its location, that is whether it is resource seeking, market-seeking, efficiency-seeking or strategic asset seeking; the main decision is in fact taken on the basis of economic geography, which is a macroeconomic decision as it takes understanding of country-level characteristics (Popovici & Calin, 2014). According to them, the theory enlightened the success of FDI among countries based on the national wealth of a country, such as its natural resources endowment, disposal of labour, local market size, infrastructure and Government policy regarding these national resources. An extension of this location-based theory is the gravity approach
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It is this country’s capacity to adapt, or to fit to the internal and external expectations of its investors, which gives countries the upper-hand in binding FDI inflows. The theory itself tries to clarify the irregular/bumpy circulation of FDI flows between countries. Wilhem’s institutional FDI fitness theory rests on four fundamental pillars –Government, market, educational and socio-cultural fitness. At the base of the pyramid are socio-cultural factors which according to Wilhelms and Witter (1998), are the oldest and most complex of all organizations. Above that is education, which the writers confirm to being essential in ensuring an eye-catching environment for FDI as educated human capital improves R&D creativity and data processing ability. The actual level of education does not appear to matter much for FDI as the requirements are hooked on/dependent on the various skills needs of projects to be started. However what is sure is that basic education may influence the productivity and efficiency of FDI operations, making influential education such as the ability to speak, hear, understand, interpret and implement instructions key for attracting …show more content…
It is in fact a firm-level (firm-specific) decision, rather than a capital market one. Hymer’s theory which placed the foundation in clarifying international production was also supported by researchers such as Kindleberger (1969) in his imperfect markets model; Knickerbocker’s (1973) oligopolistic reaction theory of following the market leader; the internalisation theory of Buckley and Casson (1976) in an international context, as well as Dunning’s (1974) eclectic paradigm. These theories are based on the same fundamental principle – the existence of imperfect markets, which then has a bearing on firm behaviour. As a result, other than Dunning’s eclectic theory, no further attention will be given to them, as they are accounted for in Dunning’s OLI
It is this country’s capacity to adapt, or to fit to the internal and external expectations of its investors, which gives countries the upper-hand in binding FDI inflows. The theory itself tries to clarify the irregular/bumpy circulation of FDI flows between countries. Wilhem’s institutional FDI fitness theory rests on four fundamental pillars –Government, market, educational and socio-cultural fitness. At the base of the pyramid are socio-cultural factors which according to Wilhelms and Witter (1998), are the oldest and most complex of all organizations. Above that is education, which the writers confirm to being essential in ensuring an eye-catching environment for FDI as educated human capital improves R&D creativity and data processing ability. The actual level of education does not appear to matter much for FDI as the requirements are hooked on/dependent on the various skills needs of projects to be started. However what is sure is that basic education may influence the productivity and efficiency of FDI operations, making influential education such as the ability to speak, hear, understand, interpret and implement instructions key for attracting …show more content…
It is in fact a firm-level (firm-specific) decision, rather than a capital market one. Hymer’s theory which placed the foundation in clarifying international production was also supported by researchers such as Kindleberger (1969) in his imperfect markets model; Knickerbocker’s (1973) oligopolistic reaction theory of following the market leader; the internalisation theory of Buckley and Casson (1976) in an international context, as well as Dunning’s (1974) eclectic paradigm. These theories are based on the same fundamental principle – the existence of imperfect markets, which then has a bearing on firm behaviour. As a result, other than Dunning’s eclectic theory, no further attention will be given to them, as they are accounted for in Dunning’s OLI