Economic, institutional and organizational determinants of foreign direct investments.

Abstract

This is an analysis of Foreign Direct Investments and their determinants, both in terms of the economic and the institutional environment. Also, there is an examination of the organizational determinants of companies which choose to invest in other countries. The main findings of the study is that all of three factors –economic, institutional and organizational – are key determinants of the FDI inflows to a country and are explanatory factors of why some countries have higher FDIs than others. From all of the factors, the ones which are associated to the institutional environment have the greater long-term effect of FDIs, while organizational determinants play a crucial role on the company’s decision to invest in another country.