Foreign investment location in less developed countries: a theoretical framework

Attempts to incorporate the “new forms” of foreign investment into a unified model. Uses this simple model to show how differences in production environment in particular, are likely to affect both the timing and mode(s) that any foreign investment is likely to take. The explanatory variables in this model are the relative efficiency gap and variable cost differential between producing at home or in a less developed country; which includes those related to the differences in the production environment. Considers foreign direct investment, joint venture, as well as licensing.