Foreign Direct Investment and its Determinants: A look to the past, a view to the future

Foreign Direct Investment (FDI) has long been a subject of interest. This interest has been renewed in recent years due to the strong expansion of world FDI flows recorded since the 1980s, an expansion that has made FDI even more important than trade as a vehicle for international economic integration. Given this fact, it should come as no surprise that a large number of theoretical explanations as to the very existence of FDI have been advanced over the years, with many studies focusing on the investigation of the determinants of such investment. However, despite the abundance of research, there is at present no universally accepted model of FDI, there is still some confusion over what are the key factors capable of explaining a country’s propensity to attract investment by multinational enterprises (MNEs) and it is not yet clear how globalization is likely to influence the determinants of, and motivations for, FDI. These unresolved issues are of special importance to developing countries that now more than ever seek to attract FDI to fuel economic growth.