IDEAS home Printed from https://ideas.repec.org/a/ibn/ibrjnl/v14y2021i4p126.html
   My bibliography  Save this article

A Literature Review on the Location Determinants of FDI

Author

Listed:
  • Yang Feng
  • Yang Wang

Abstract

Foreign direct investment (FDI) is an important force to promote economic growth and social development in both developed and developing countries, while the distribution of FDI in the world and within countries is extremely uneven. This paper systematically summarizes the main determinants that affect the location choice of FDI in recent theoretical and empirical studies, including institution and investment environment, trade cost and industrial agglomeration, market size and natural resource, cultural distance and social network. Based on the work of this paper, it is helpful to better understand the location preference of multinational enterprises (MNEs) in FDI activities, and provide a reference basis for the host country to attract investment and promote economic growth.

Suggested Citation

  • Yang Feng & Yang Wang, 2021. "A Literature Review on the Location Determinants of FDI," International Business Research, Canadian Center of Science and Education, vol. 14(4), pages 126-126, April.
    • Handle: RePEc:ibn:ibrjnl:v:14:y:2021:i:4:p:126
    as

    Download full text from publisher

    File URL: http://www.ccsenet.org/journal/index.php/ibr/article/download/0/0/44997/47665
    Download Restriction: no
    File URL: http://www.ccsenet.org/journal/index.php/ibr/article/view/0/44997
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fan, Haichao & Lin, Faqin & Tang, Lixin, 2018. "Minimum Wage and Outward FDI from China," Journal of Development Economics, Elsevier, vol. 135(C), pages 1-19.
    2. Chichilnisky, Graciela, 1994. "North-South Trade and the Global Environment," American Economic Review, American Economic Association, vol. 84(4), pages 851-874, September.
    3. Bruce A. Blonigen, 2019. "Firm-Specific Assets and the Link Between Exchange Rates and Foreign Direct Investment," World Scientific Book Chapters, in: Foreign Direct Investment, chapter 3, pages 89-120, World Scientific Publishing Co. Pte. Ltd..
    4. Blanc-Brude, Frédéric & Cookson, Graham & Piesse, Jenifer & Strange, Roger, 2014. "The FDI location decision: Distance and the effects of spatial dependence," International Business Review, Elsevier, vol. 23(4), pages 797-810.
    5. Kenneth A. Froot & Jeremy C. Stein, 1991. "Exchange Rates and Foreign Direct Investment: An Imperfect Capital Markets Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1191-1217.
    6. Gao, Ting, 2003. "Ethnic Chinese networks and international investment: evidence from inward FDI in China," Journal of Asian Economics, Elsevier, vol. 14(4), pages 611-629, August.
    7. Magnus Blomström & Ari Kokko & Mario Zejan, 2000. "Foreign Direct Investment," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-59861-4, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Aluko, Bukola & Garri, Myropi & Owalla, Beldina & Kim, Jae-Yeon & Pickernell, David, 2024. "Informal institutions’ influence on FDI flows: A configurational fsQCA analysis of corruption as part of the MNEs’ FDI motivation system," International Business Review, Elsevier, vol. 33(6).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aizenman, Joshua, 2003. "Volatility, employment and the patterns of FDI in emerging markets," Journal of Development Economics, Elsevier, vol. 72(2), pages 585-601, December.
    2. Rajesh Chakrabarti & Barry Scholnick, 2002. "Exchange rate expectations and foreign direct investment flows," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(1), pages 1-21, March.
    3. Shi, Jiao, 2019. "Vertical FDI and exchange rates over the business cycle: The welfare implications of openness to FDI," Journal of Development Economics, Elsevier, vol. 138(C), pages 274-293.
    4. Raphael Chiappini & François Viaud, 2021. "Macroeconomic, institutional, and sectoral determinants of outward foreign direct investment: Evidence from Japan," Pacific Economic Review, Wiley Blackwell, vol. 26(3), pages 404-433, August.
    5. Hyun Song Shin & Viral Acharya & Tanju Yorulmazer, 2011. "Fire Sale FDI," Korean Economic Review, Korean Economic Association, vol. 27, pages 163-202.
    6. Maroula Khraiche & Jeffrey Gaudette, 2013. "FDI, Exchange Rate Volatility and Financial Development: Regional Differences In Emerging Economies," Economics Bulletin, AccessEcon, vol. 33(4), pages 3143-3156.
    7. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    8. Lee, Donghyun, 2013. "New evidence on the link between exchange rates and asset-seeking acquisition FDI," The North American Journal of Economics and Finance, Elsevier, vol. 24(C), pages 153-158.
    9. Cohle, Zachary & Ortega, Alberto, 2022. "Life of the party: The polarizing effect of foreign direct investment," European Journal of Political Economy, Elsevier, vol. 72(C).
    10. Sakli Hniya & Ahlem Boubker & Fatma Mrad & Sawssen Nafti, 2021. "The Impact of Real Exchange Rate Volatility on Foreign Direct Investment Inflows in Tunisia," International Journal of Economics and Financial Issues, Econjournals, vol. 11(5), pages 52-67.
    11. Malcolm Baker & C. Fritz Foley & Jeffrey Wurgler, 2004. "The Stock Market and Investment: Evidence from FDI Flows," NBER Working Papers 10559, National Bureau of Economic Research, Inc.
    12. Manlagñit, Maria Chelo V., 2011. "The economic effects of foreign bank presence: Evidence from the Philippines," Journal of International Money and Finance, Elsevier, vol. 30(6), pages 1180-1194, October.
    13. Shetty, Anand & Manley, John & Kyaw, Nyonyo, 2019. "The impact of exchange rate movements on mergers and acquisitions FDI," Journal of Multinational Financial Management, Elsevier, vol. 52.
    14. Zainab Jehan & Azooba Hamid, 2017. "Exchange rate volatility and capital inflows: role of financial development," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 16(3), pages 189-203, December.
    15. Dunning, John H., 2000. "The eclectic paradigm as an envelope for economic and business theories of MNE activity," International Business Review, Elsevier, vol. 9(2), pages 163-190, April.
    16. Hong, Seiwoong & Lee, Junyong & Oh, Frederick Dongchuhl & Shin, Donglim, 2023. "Religion and foreign direct investment," International Business Review, Elsevier, vol. 32(1).
    17. Todd Sarnstrom & Michael Ryan, 2023. "Third‐country exchange rate effects on foreign direct investment flows: A global vector autoregessive approach," Review of International Economics, Wiley Blackwell, vol. 31(2), pages 522-549, May.
    18. Fathi Ali & Norbert Fiess & Ronald Macdonald, 2011. "Climbing To The Top? Foreign Direct Investment And Property Rights," Economic Inquiry, Western Economic Association International, vol. 49(1), pages 289-302, January.
    19. Shi Li & Hironobu Nakagawa, 2022. "Exchange rates and foreign direct investment: Evidence from Chinese firm‐level data," The World Economy, Wiley Blackwell, vol. 45(9), pages 2902-2923, September.
    20. Fernando Mistura & Caroline Roulet, 2019. "The determinants of Foreign Direct Investment: Do statutory restrictions matter?," OECD Working Papers on International Investment 2019/01, OECD Publishing.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibn:ibrjnl:v:14:y:2021:i:4:p:126. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.