Review Of The Theoretical Literature Of Foreign Direct Investment (FDI) and Multinational Enterprises (MNEs).

This article provides an overview of the multinational enterprises (MNEs) theories, (horizontal and vertical FDI, knowledge capital model, proximity-concentration approach, (Ownership, Location, and Internalization) OLI diagram, complex integration strategies and the third country effect), which have been accumulated so far. Each FDI type has a different theoretical explanation about the inter-country long term capital movement, which leads to the FDI economic determinants and their relationship nature with FDI. Hence, we introduce them to show the new development in this area of study, and the theoretical base of the controversial literature around it. In order to do so, we look over definitions, previous literature roots, theories propositions and implications of each type of FDI.

JEL Classification: F21 and F23