Foreign Direct Investment Motivated By Institution Shopping

Authored by: Mike W. Peng , Young H. Jung

The Routledge Companion to the Geography of International Business

Print publication date:  March  2018
Online publication date:  March  2018

Print ISBN: 9781138953345
eBook ISBN: 9781315667379
Adobe ISBN:

10.4324/9781315667379-24

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Abstract

Why do multinational enterprises (MNEs) undertake foreign direct investment (FDI)? The number of MNEs that undertake FDI is increasing. The number of MNEs worldwide was approximately 7,000 in 1970, and increased to approximately 82,000 in 2009 (UNCTAD, 2009). The number of countries that receive FDI flow was 121 in 1970 and 201 in 2014 (UNCTAD, 2015). Since the 1970s, the world economy has witnessed the participation of the developing countries in East Asia, the transition economies in Central and Eastern Europe, and the emerging economies such as Brazil, Russia, India, and China (BRIC). These countries have not only become major recipients of FDI, but have also become breeding grounds for new multinationals that undertake significant outward FDI.

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