Application of the eclectic Danning paradigm in foreign direct investment

Рамський, Андрій Юрійович and Жильцов, Максим Олександрович (2020) Application of the eclectic Danning paradigm in foreign direct investment Ефективна економіка (11). ISSN 2307-2105

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Abstract

The work is devoted to the study of the application of the eclectic paradigm of J. Dunning in foreign direct investment. It is proved that from the point of view of research of foreign investments in postsocialist countries with transition economies, J. Dunning's eclectic theory, which takes into account both the contribution of the firm and national factors, therefore deals with such national factors as geographical and macroeconomic environment, political stability, tax incentives and government regulation are the most attractive and rational. It was found that the paradigm focuses on the use of assets, which J. Dunning classified as property advantages, placement advantages and internalization advantages. Internalization is a means of overcoming market imperfections, which take the form of monopolistic policies of participants, uncertainty of supply and demand,inconsistent and irrational behavior of entities or asymmetry of information in the market, by creating their own internal market. Also, the study of the essence of asymmetric information and its place in intersectoral relations is considered in the work. For the formation of a developed investment market, an important aspect of ensuring its functioning is the construction of an information framework that will reduce the risks of information asymmetry, the preconditions for which are the probability of financial losses from cross-sectoral operations and transfer of risks to primary investors. It is proved that the provision of professional assessments of the risk of purchasing investment products, as well as the distribution of responsibility for financial decisions of investors will reduce the asymmetry of information in intersectoral cooperation. We see that there is no single theory that could cover and explain all the specifics of foreign direct investment and decisions of multinational companies regarding their location. While the neoclassical model of international trade, which explains the movement of capital because of its income gap, has been sharply criticized for assuming perfect competition, J. Dunning's OLI paradigm has proved to be the best approach to explaining foreign direct investment because it considers multinational companies as enterprises with market power and covers the most important aspects of previous theoretical developments.

Item Type: Article
Uncontrolled Keywords: eclectic paradigm; foreign investment; asymmetric information; OLI paradigm; investment market.
Subjects: Статті у наукометричних базах > Index Copernicus
Статті у журналах > Фахові (входять до переліку фахових, затверджений МОН)
Divisions: Факультети > Факультет інформаційних технологій та управління > Кафедра фінансів та економіки
Depositing User: доцент Андрій Юрійович Рамський
Date Deposited: 29 Dec 2020 07:47
Last Modified: 29 Dec 2020 07:47
URI: https://elibrary.kubg.edu.ua/id/eprint/34148

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