Sixty Years of FDI Empirical Research: Review, Comparison and Critique

International capital allocation influences has a social, political and economic impact on the trading countries. Thus, it has been investigated so as to determine the key factors of capital flows and their impact on the host country’s economy. A significant amount of empirical research has been conducted over the past 60 years regarding foreign direct investment (FDI) inflows in the developing and undeveloped countries. The purpose of the present study is to present a literature review of empirical papers regarding the FDI in developing countries and their interaction with the economic theories and systems. Thus, we aim at investigating the interaction between the economic and social events and the empirical examination of FDI so as to study whether these facts have influenced the orientation of the researchers through time. In particular, empirical studies published from 1950 to 2015 have been selected. The papers are presented according to the publication date and thus four periods are studied: from 1950 to 1973, from 1974 to 1989, from 1990 to 2004 and from 2005 to 2015. The present study focuses on the FDI inflows, thus the empirical papers investigated solely the FDI exports are not presented. Furthermore, the papers have been selected so that the countries of the samples cover each geographical region, while in certain papers FDI are studied as a dependent variable and in the rest as an independent one. The papers are discussed based on the statistical method applied, the sample chosen and the trends on the variables used. It is argued that the economic theories and studies influence the orientation of the studies. Also, recent empirical papers include larger samples and countries of every geographical region despite the fact that most of them focus on the largest recipients of FDI, that is to say the Asian and the Latin American countries.