General theories of FDI

The development of technologies in the 1960s, the increased international influence of FDI,
following the huge rise in foreign capital flows, has been associated with increased interest of
economists and international scholars for understanding the emergence of FDI that resulted in the
initial constitution of FDI-related theoretical studies. Nowadays, the Dunning's theory of
internationalisation is considered a traditional FDI theory that together with its extensions, constitute
the most recognized theory of FDI. Unlike early traditional theories that explained the characteristics,
motives and activities of the FDI from the perspective of the developed countries (Hymer, 1976;
Vernon, 1966), Dunning's theory interacted with the theory of location advantage, monopolistic
advantages and internalization and added other characteristics of FDI, which interpreted the motives
and conditions of the FDI and gave rise to the analysis of FDI determinants.
Table 1: Determinants of FDI Factor(Category) Variable
Social:
• • Ratio of literacy and school enrolment
• • Availability of technical and professional workers
• • Modernization of Outlook
• • Strength of labor movement
• • Extent of urbanization