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http://ssrn.com/abstract=1283573
 
 

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Why Do Firms Invest Abroad? An Analysis of the Motives Underlying Foreign Direct Investments


Chiara Franco


University of Bologna

Francesco Rentocchini


University of Trento - Department of Economics; INGENIO (CSIC-UPV), Polytechnic of Valencia

Giuseppe Vittucci Marzetti


Università degli Studi di Milano-Bicocca - Department of Sociology and Social Research; University of Trento - Department of Economics

December 15, 2008


Abstract:     
Although FDI have been at the forefront of economic debate since a long time, economists have not yet developed a unified framework for their investigation. In this paper, we put forward the idea that an essential point to analyze FDI concerns their underpinning motives. Motives are at the core of FDI and FDI are only but one of different alternative means for firms to grasp an opportunity in a foreign country. We discuss the factors that shape the set of available alternatives and analyze those affecting the decision to engage in FDI (internalisation determinants), along with those influencing their localisation (localisation determinants). Starting from Dunning (1993) we put forward a revised taxonomy of FDI motives consistent with this framework - resource seeking, market seeking and non-marketable asset seeking. In order to show its practical implications, we survey common empirical issues on FDI showing how our analysis can shed light on seemingly contradictory empirical results.

Number of Pages in PDF File: 29

Keywords: FDI determinants, FDI motives, Taxonomy, Foreign Direct Investments

JEL Classification: F210, F230, L230, L240

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Date posted: October 13, 2008 ; Last revised: June 3, 2009

Suggested Citation

Franco, Chiara and Rentocchini, Francesco and Vittucci Marzetti, Giuseppe, Why Do Firms Invest Abroad? An Analysis of the Motives Underlying Foreign Direct Investments (December 15, 2008). Available at SSRN: http://ssrn.com/abstract=1283573 or http://dx.doi.org/10.2139/ssrn.1283573

Contact Information

Chiara Franco
University of Bologna ( email )
Strada Maggiore 45
40125 Bologna
Italy
Francesco Rentocchini
University of Trento - Department of Economics ( email )
Via Inama 5
Trento, 38100
Italy
HOME PAGE: http://https://sites.google.com/site/francescorentocchini/
INGENIO (CSIC-UPV), Polytechnic of Valencia
Camino de Vera s/n, Edif.8E, Univ.Politec.Valencia
Valencia, 46022
Spain
Giuseppe Vittucci Marzetti (Contact Author)
University of Milan, Bicocca - Department of Sociology and Social Research ( email )
via Bicocca degli Arcimboldi, 8
Milano, MI 20126
Italy
University of Trento - Department of Economics ( email )
Via Inama 5
I-38100 Trento
Italy
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