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<p>Foreign Direct Investment (FDI) plays a salient role in trading, representing the flow of capital from one country to another, typically in exchange for ownership stakes and operational control in enterprises, and contributing to the host economy’s development through technology transfer, employment generation, and market integration. There are myriads of theories that explain how FDI affects the industry, but the mechanism underlying the effect is not always clear, leaving a glaring knowledge gap. To fulfil the gap, we propose an assumption that FDI varies among countries and its efficacy is subject to the contextual factors. To examine the assumption, we conduct a systematic review, in which FDI theories and cognate themes are gathered from sixty-three articles (1960–2025) and analysed. Two meaningful findings are revealed. Firstly, the efficacy of FDI is linked to the motivations of investors, country-context and industry-context. Secondly, demerits of any particular FDI theory may facilitate the development of another one; that is, new theories are inspired and refined by the previous theories. Research findings have brought valuable insights to advance the FDI literatures. With better understanding of FDI theories, investors are inclined to make theory-informed decisions and formulate better investment strategies.</p>

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What Can Make ‘Foreign Direct Investment’ Work? Investors' Motivation, Country Context and Industry Context All Play Their Roles

  • 期刊论文

  • 发表日期：

    2026年3月18日

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  • Susan Akinwalere,
  • Kirk Chang

摘要

Foreign Direct Investment (FDI) plays a salient role in trading, representing the flow of capital from one country to another, typically in exchange for ownership stakes and operational control in enterprises, and contributing to the host economy’s development through technology transfer, employment generation, and market integration. There are myriads of theories that explain how FDI affects the industry, but the mechanism underlying the effect is not always clear, leaving a glaring knowledge gap. To fulfil the gap, we propose an assumption that FDI varies among countries and its efficacy is subject to the contextual factors. To examine the assumption, we conduct a systematic review, in which FDI theories and cognate themes are gathered from sixty-three articles (1960–2025) and analysed. Two meaningful findings are revealed. Firstly, the efficacy of FDI is linked to the motivations of investors, country-context and industry-context. Secondly, demerits of any particular FDI theory may facilitate the development of another one; that is, new theories are inspired and refined by the previous theories. Research findings have brought valuable insights to advance the FDI literatures. With better understanding of FDI theories, investors are inclined to make theory-informed decisions and formulate better investment strategies.