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Compare and contrast these explanations of FDI: internalization theory, Vernon's product life cycle theory, and Knickerbocker's theory of FDI. Which theory do you think offers the best explanation of the historical pattern of FDI

545 words, two references

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The response addresses the queries posted in 545 words with references.

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The response addresses the queries posted in 545 words with references.

//In this paper, we will compare and contrast some FDI theories. FDI theories are: Internalization theory, Vernon's product life cycle theory and Knickerbocker's theory of Foreign Direct investment. In this paper, we will also discuss that theory which will provide the best explanation of the historical pattern of the FDI's, amongst the three theories.//

Internalization theory of FDI's.//

The Internalization theory defines about the imperfections of the market across the globe. In this theory, it prevents the practice of efficient operations of the foreign investment and trade. Information is an intermediate product and there is no market, which can provide proper information developed by the MNE's. Information and knowledge, which are easily available in the vertical integration, is not available in the internalization theory. This theory is used to describe the direct investment industrial structure and ...

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Ashish Sharma, MBA (IP)
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  • MBA (IP), International Center for Internationa Business
  • BBA, University of Rajasthan
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