Greenfield Investment
Establishing a new operation in a foreign country
Flow of FDI
the amount of direct investment into a country in a defined time period undertaken by foreign entities (FDI inflow), or the amount of direct investment into foreign countries made by entities resident in a country in a defined period of time (FDI outflow)
Stock of FDI
the cumulative value of direct investments that have been made by foreign entities in a country at a given point in time
Outflows of FDI
Flow of foreign direct investment out of a country.
Inflows of FDI
Flow of foreign direct investment into a country
Eclectic Paradigm
Argument that combining location specific assets or resource endowments and the firm's own unique assets often requires FDI; it requires the firm to establish production facilities where those foreign assets or resource endowments are located
Exporting
Sale of products produced in one country to residents of another country
Licensing
Occurs when a firm gives the right to produce its product, its production processes, or its brand name or trademark to another firm in exchange for a royalty fee
Internalization Theory
The argument that firms prefer FDI over licensing in order to retain control over know-how, manufacturing, marketing, and strategy or because some firm's capabilities are not amenable to licensing.
Market Imperfections
Imperfections in the operation of the market mechanism.
Oligopoly
An industry composed of a limited number of large firms
Multipoint Competition
Arises when two or more enterprises encounter each other in different regional markets, national markets, or industries.
Location-Specific Advantages
Advantages that arise from using resource endowments or assets that are tied to a particular foreign location and that a firm finds valuable to combine with its own unique assets
Externalities
Knowledge spillovers
Balance-of-Payments Accounts
National accounts that track both payments to and receipts from foreigners
Current Account
In the balance of payments, records transactions involving the export or import of goods and services
Offshore production
FDI undertaken to serve the home market
Gross Fixed Capital Formation
Summarizes the total amount of capital invested in factories, stores, office buildings, and the like.