Trends in foreign direct investment flows: a theoretical and empirical analysis

D Sethi, S E Guisinger, S E Phelan and D M Berg
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D Sethi: School of Business Administration, Oakland University, USA
S E Guisinger: School of Management, University of Texas at Dallas, USA
S E Phelan: School of Management, University of Texas at Dallas, USA
D M Berg: School of Business Administration, University of Wisconsin, Milwaukee, USA

Journal of International Business Studies, 2003, vol. 34, issue 4, 315-326

Abstract: This paper seeks to provide a rationale for changing trends in the flow and determinants of foreign direct investment (FDI) as a result of macro-economic and firm strategy considerations. We identify several factors that impact on such trends, and develop propositions that could explain the phenomenon generically. The study then provides preliminary empirical support for the propositions presented, and outlines the path for further research needed to investigate more causal links. The statistical analysis of investments by US multinational enterprises (MNEs) reveals significant changes in the regional distribution of FDI, and a change in some of its traditional determinants. Results show that US MNEs are now making increasing investments into Asia to exploit low wage levels and to secure entry into new markets. Journal of International Business Studies (2003), 34, 315–326. doi:10.1057/palgrave.jibs.8400034

Date: 2003
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