The Evolution of Theories of Foreign Direct lnvestment

This paper reviews the history of the theories of foreign direct &Icirc;nvestment(FDI). Although the mam purpose of this paper is to introduce a stat.e- of-the art new 1heory, lhe paper also emphasizes that the old theor&Iacute;es not only give verγ lmpoπant implications, but also provide a base for developing new 1heor&Igrave;es. We als&uuml; have to realize th<::ll the&uuml;ries need to be developed not for the theories per se, but for use as guidelines In understand&iacute;ng the real world. This paper reviews the mos1 important theories of FDI, such as the market imperfections theoI&yuml; , the intemalization theory, the resource- based view 01 the lirm, the eclectic or OLI paradigm, and the imbalance theory. Practitioners as well as scholars will find useful impl&#8226;cat&icirc;ons from the historic re‘liew of important FDI theory concepts