7-12
What Are The Theoretical Approaches To
FDI?
The radical view-the MNE is an instrument of imperialist domination and a tool for exploiting host countries to the exclusive benefit of their capitalist-imperialist home countries
The free market view-international production should be distributed among countries according to the theory of comparative advantage
embraced by advanced and developing nations including the United States, Britain, Chile, and Hong Kong
Pragmatic nationalism-FDI has both benefits (inflows of capital, technology, skills and jobs) and costs (repatriation of profits to the home country and a negative balance of payments effect)
FDI should be allowed only if the benefits outweigh the costs
Recently, there has been a strong shift toward the free
market stance creating
a surge in FDI worldwide
an increase in the volume of FDI in countries with newly liberalized regimes