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A Generalized Model for Foreign Direct Investment Flows to All Countries

From: The Journal of Developing Areas
Volume 48, Number 1, Winter 2014
pp. 165-175 | 10.1353/jda.2014.0010



Foreign Direct Investment (FDI) has been spreading across the globe. It evolved from a trickle in history to what appears as a spectacle in the modern world. No model is yet available, beyond common sense to account for its centrality in the global process. We can now chart a generalization course of FDI flows across borders. The evolution of the flow processes are outlined on two scales, one that presumes a well-ordered path within traditional trade theories, which will allow us to advance the notion that FDI is increasingly spreading across the globe, and another that is homologous to a theorem of L. E. Brouwer who proved an existent result in the limiting case for FDI flows. Both aspects are validated with trends in FDI flows. Currently, the triad block, which encompasses North America, Europe, East and South East Asia are the largest recipients of the world’s FDI flows. Prior to this, FDI flows were most noticeable between the United States and Europe in the post-WWII period under the Marshall plan. The phenomenon is more recently noticed between Japan and East Asian countries. These observations lend credence to our development of a model for FDI flows to all countries throughout the world.

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