Carril BaleixIllinois University, USA
In the past decade, the percentage of Foreign Direct Investment (FDI) from developing countries increased dramatically and substantially modified the world economy. This article summarizes the contributions of the growing bibliography on the causes and consequences of FDI. First, the theories that explain the foreign investment of multinationals that are based on conventional FDI theory and institutional theory are reviewed. Also included are conclusions drawn from empirical studies. Subsequently, the expected effects of FDI in recipient countries are reviewed. We also include the results of the few studies that have evaluated these consequences recently. It is observed that the institutional and economic context of the issuing country contributes to the advantages of the company and its motivations to invest abroad, as well as the choice of destination and finally the Impact of the investment. Thanks to recent studies, motivation and location decisions can be better understood, although more research is needed to clarify the rest of the process, which is a promising area of research. In particular, the scope of studies could be extended in several directions, which would allow better advice on FDI promotion policies in both the North and the South.
Keywords: Foreign Direct Investment; Emerging countries; China; Eclectic theories; Institutions