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Multinational Corporations and Foreign Direct InvestmentAvoiding Simplicity, Embracing Complexity$
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Stephen D. Cohen

Print publication date: 2007

Print ISBN-13: 9780195179354

Published to Oxford Scholarship Online: May 2007

DOI: 10.1093/acprof:oso/9780195179354.001.0001

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 Where Multinational Corporations Invest and Don't Invest and Why

 Where Multinational Corporations Invest and Don't Invest and Why

(p.148) 7 Where Multinational Corporations Invest and Don't Invest and Why
Multinational Corporations and Foreign Direct Investment

Stephen D. Cohen

Oxford University Press

Because not even the largest MNC can afford to invest in every country, an important phase of the FDI cycle is the process by which a country chooses where to establish its foreign subsidiaries. The heterogeneity of business strategies and objectives means that no single guideline exists for manufacturing and services companies when selecting appropriate overseas sites. This chapter begins with a statistical breakdown showing the asymmetrical geographical distribution of MNCs, with emphasis on their concentration in industrial countries. Next, the various positive factors that attract MNCs to certain countries, including financial incentives, are examined in detail. A separate section examines the various conditions that tend to repel incoming FDI. A recurring theme is that those persons believing MNCs to be a negative force on host countries would applaud government policies to discourage their entry or impose comprehensive regulation; advocates of private enterprise would have the opposite value judgment.

Keywords:   corruption, official financial incentives, business regulation, agglomeration economies, Trade-Related Investment Measures Agreement

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