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Developing Tendencies of Foreign Direct Investments / პირდაპირი უცხოური ინვესტიციების განვითარების ტენდენციები

Sofiko Dzhvarsheishvili / სოფიკო ჯვარშეიშვილი

PhD student at the faculty of economics and business at Iv. Javakhishvili Tbilisi State University / ივ.ჯავახიშვილის სახელობის თბილისის სახელმწიფო უნივერსიტეტის ეკონომიკისა და ბიზნესის ფაკულტეტის დოქტორანტი

Abstract

The formation process of foreign direct investment theories began in the second half of the twentieth century, it was period that the importance of foreign direct investment (FDI) in international capital movement increased, and this period was characterized by the rapid growth of multinational enterprises, which, in turn, is a major source of FDI. Scientific and technological progress has become the basis for decisions of transnational companies to invest capital in to different parts of the world and to coordinate and control its many branches from one country. During this period scientists actively began to develop theories and mathematical models of foreign direct investments, which meant studying the genesis of FDI, as well as analyzing their impact on the economy of both the host and the issuer countries. The analysis of foreign direct investment theories is closely related to the study of the activities of multinational corporations. Among them are some paradigms containing interesting discoveries that view the foreign direct investment as a contributing factor for the economic growth of the host country and its industrial development. In this article, the author consider the key theories and models of foreign direct investment:

  1. The Product Life Cycle Theory, which is developed by Vernon; 2. Transnational companies and monopolistic computation theory, which is developed by Hymer; 3. Generalized theory of economic development, which is developed by Akamatsu; 4.The competitive advantage of nation’s theory, which is developed by Porter; 5.The eclectic paradigm and country's investment development theory, which is developed by Dunning; 6.Differential model of capital distribution between countries by Leontiev.

The theories and models provide a basic range of motives of investors' behavior in the world market. It also makes it possible to analyze what impact foreign direct investment has on the economy of the recipient country and what forecast the recipient country's economy will have.

Keywords: Globalization, Foreign Direct Investment, Economic Growth, Multinational Corporations, Analysis of Basic Theories and models. / გლობალიზაცია, პირდაპირი უცხოური ინვესტიციები, ეკონომიკური ზრდა, მულტინაციონალური კორპორაციები, ძირითადი თეორიების ანალიზი.

Introduction

References:

1.Dunning J., Trade, location of Economic Activity and the MNE: Search for an Electic Approach// “The International Location of Economic Activities”, London 1977, pp. 395-418.

2.Dunning J. Explaining changing Patterns of International Production: In Defense of the Eclectic Theory//Oxford Bulletin of Economics and Statistics, Nov.1979, vol.41.

3.Dunning J. The Product Cycle Hypothesis in a new international Environment//Oxford Bulletin of Economics and Statistics, November 1979, vol.41.

4.Hymer S., The International Operations of National Firms: A Study of Direct Foreign Investment// Cambridge: MIT Press, PhD dissertation, 1960, Massachusetts Institute of Technology.

5.Kasahara S. The Asian Developmental State and the Flying Geese Paradigm. November 2013 36 p. URL: http://unctad.org/en/PublicationsLibrary/osgdp20133_en.pdf (accessed 1.05.2016)

6.Kindleberger C. , Restrictions on Direct Investment in Host Countries//Discussion Paper for the University of Chicago Workshop on International Business, March 1969.

7.Kojima K., A Macroeconomic Approach to Foreign Direct Investment// Hitotsubashi Journal of Economics, June 1973, vol.14.

8.Kojima K., International Trade and Foreign Investment: Substitutes of Complements// Hitotsubashi Journal of Economics, June 1975 vol.16.

9.Porter M., The Competitive Advantage of Nations// London 1990

10.Vernon R., International Investment and International Trade in the Product Cycle//Quarterly Journal of Economics, May 1966, Vol.80;

11.Леонтьев В. Темпы долговременного экономического роста и перевод капитала из развитых в развивающиеся страны (в кн.: “Леонтьев В. Экономические эссе. Теории, исследования, факты и политика”. М.: Политиздат. 1990),

References

The New Economist N3-4, (2021), Vol 16, Issue 3

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Published Date:

11/01/2022