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Caves (1996)Management > Global Firm > Lectures > Independent Research > Caves > Failure of P assets > OLI and transaction costs > Hypothesis > Factors and Barriers > FDI
FDI“Foreign investment was traditionally a concern of international economics, a branch disposed to use general-equilibrium tools for explaining economy-wide or world-wide phenomena.” “The key junction between international economics and the MNE is the export of equity capital that occurs when a company starts a foreign subsidiary.” In FDI, the main aim of MNEs is to make maximum profits, “an arbitrager of equity capital” The theory has several bases: that an MNE should be based in a capital-intensive country and should transfer capital to capital-poor, labour-intensive countries. Caves argues that macro-level theory was not tested empirically. Pp24-5
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