CHAPTER SEVEN

CHAPTER SEVEN - CHAPTER SEVEN Eclectic paradigm of foreign...

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CHAPTER SEVEN Eclectic paradigm of foreign direct investment Dunning’s eclectic paradigm - in addition to the various factors discussed earlier, two additional factors must be considered when explaining both the rationale for and the direction of foreign direct investment o location-specific advantages - that arise from using resource endowments or assets that are tied to a particular location and that a firm finds valuable to combine with its own unique assets o externalities - knowledge spillovers that occur when companies in the same industry locate in the same area Rationale for and against FDI Ways for countries to encourage and discourage FDI Trends in FDI Both the flow and stock of FDI in the world economy have increased over the last 20 years FDI has grown more rapidly than world trade and world output because o firms still fear the threat of protectionism o the general shift toward democratic political institutions and free market economies has encouraged FDI o the globalization of the world economy is prompting firms to undertake FDI to ensure they have a significant presence in many regions of the world Historical pattern of FDI 1. Strategic Behavior
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This note was uploaded on 04/05/2012 for the course SOM 354 taught by Professor Staff during the Fall '11 term at Syracuse.

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CHAPTER SEVEN - CHAPTER SEVEN Eclectic paradigm of foreign...

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