List and explain the Foreign Direct Investment (FDI) theories.
Foreign Direct Investment (FDI) theories provide insights into why businesses expand operations internationally, how they choose locations, and what factors drive investment decisions. Several key theories explain FDI in the context of International Business Management.
### 1. Theory of Comparative Advantage
Developed by David Ricardo, this theory suggests that countries should specialize in producing goods where they have a relative efficiency advantage. FDI occurs when firms invest in foreign locations to exploit these advantages, such as low labor costs, natural resources, or technological expertise. This theory explains why firms establish production facilities in different countries to reduce costs and improve global competitiveness.
### 2. Monopolistic Advantage Theory
Proposed by Stephen Hymer, this theory states that firms engage in FDI when they possess unique competitive advantages over local firms, such as ________ ____ ______ ________ ________ ____ _______.
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