FDI theories. A location-based approach

Abstract

Given the importance of FDI for the economic growth of both home and host countries, the aim of this paper is to assess the importance granted to location advantages during the development of FDI theory. We start with the earliest theoretical directions as regards FDI location issues and extend our study to describing less debated theories, but of a particular importance for this theme. In this way, we have the opportunity to emphasize the changes in FDI location determinants. We find that a direction of the FDI theories’ expansion is due to the incorporation of new variables on location, although the location advantages are barely mentioned in the first explanations regarding the international activity of the firms.

Keywords

• foreign direct investments
• location
• OLI paradigm
• new economic geography
• institutional theory