Why do companies go to the trouble of establishing operations abroad through foreign direct investment when two alternatives, exporting and licensing, are available to them for exploiting the profit opportunities in a foreign market? or why do so many companies prefer FDI over either exporting or licensing?

DISCUSSION QUESTION

Why do companies go to the trouble of establishing operations abroad through foreign direct investment when two alternatives, exporting and licensing, are available to them for exploiting the profit opportunities in a foreign market? or why do so many companies prefer FDI over either exporting or licensing?

Explain what determines the level of economic development of a nation.

Recognize current trends regarding foreign direct investment (FDI) in the world economy.

Explain the different theories of FDI.