Table 2: Motivations for Foreign Direct Investment by the New Multinational Enterprises
Backward linkage into raw materials
Firm seeks to secure supplies of crucial inputs in the face of uncertainty or asset specificity.
Lall 1983; Wells 1983; Fields 1995; UNCTAD 2006
Forward linkage into foreign markets
Firm seeks to secure access to the market in the presence of asset specificity.
Wells 1983; Fields 1995; UNCTAD 2006
Home-country government curbs
Firm attempts to overcome growth restrictions imposed by the government in its home market.
Lall 1983; Wells 1983; UNCTAD 2006
Spreading of risk
Firm locates assets in different countries to manage risk.
Move personal capital abroad
Firm invests abroad so that owner(s) diversify their exposure to any one country.
Follow a home-country customer to foreign markets
Firm follows home-country customers as they expand horizontally to other countries.
Wells 1983; UNCTAD 2006
Invest in new markets in response to economic reforms in the home country
Firm enjoying monopolistic or oligopolistic position in the home market is threatened by liberalization, deregulation and/or privatization policies.
Guillén 2005; Goldstein 2007
Acquire firm-specific intangible assets
Firm invests or acquires assets in more developed countries.
Lall 1983; UNCTAD 2006
Exploit firm-specific intangible assets
See Table 3