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This document summarizes recent literature on determinants of foreign direct investment (FDI). It finds that while research intensity is often correlated with multinationality, evidence for other factors like advertising is mixed. It also discusses how partial equilibrium studies examine how macroeconomic policies like exchange rates and taxes affect FDI decisions. More recent work uses firm-level data and develops general equilibrium models to better analyze factors driving FDI.

Author

Zafar Saeed

Language

EN