The Drivers and Formal Theories of FDI

Imad A. Moosa

Chapter 2 in Understanding the Geopolitics of Foreign Direct Investment, 2026, pp 25-56 from Edward Elgar Publishing

Abstract: The drivers of FDI may or may not be identified by a formal theory, but they are regarded as drivers because it is plausible to think so. These drivers (economic, financial, technological and political) are typically taken to be the characteristics of a host country that make it attractive for foreign investors as a location of foreign operations. The other side of the coin is that a country that loses these characteristics will be exposed to the consequence of divestment. The formal theories of FDI are intended to explain why investors indulge in FDI, why they choose one country in preference to another to locate foreign business activity, and why they choose a particular entry mode.

Keywords: Drivers of FDI; Theories of FDI; Foreign Direct Divestment; Index of FDI drivers; Market-seeking FDI; Efficiency-seeking FDI (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035361526
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