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Unformatted text preview: Mutual Funds | Real Estate | Income | US Banking | Retirement Top Diamonds Companies | Multinational Corporations Home > Investments > Foreign investments > The OLI Paradigm The Eclectic Theory of Foreign Direct Investing (or the OLI Paradigm). OLI Paradigm - The Eclectic Theory was evolved by John Dunning The Eclectic Theory was evolved by John Dunning , emeritus professor at the Rutgers University (United States) and University of Reading (United Kingdom). The OLI Paradigm is a mix of 3 various theories of foreign direct investment, that concentrating on a various question. FDI= O + L + I, "O"- Ownership Advantages (or FSA - Firm Specific Advantages ). This firm specific advantage is ussually intangible and can be transferred within the multinational enterprise at low cost (e.g., technology, brand name, benefits of economies of scale). The advantage either gives rise to higher revenues and/or lower costs that can offset the costs of operating at a distance in an abroad location. A Multinational enterprices operating a plant in a foreign country is faced with additional costs parallelled to a local competitor. The additional costs could be specified: a. a failure of knowledge about local market conditions b. legal, institutional, cultural and language diversities c. the increased costs of communicating and operating at a distance...
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This note was uploaded on 09/06/2010 for the course ECON ECON0602 taught by Professor Qiu during the Fall '09 term at HKU.
- Fall '09