Modeling FDI Attraction-An Optimization Model

In this paper, we examine political, financial, and economic risk factors that influence the inflow of FDI into host countries. We develop an optimization model anchored in the eclectic theory of international production and show a numerical example of how our model can be employed for decision-making purposes. Our work is based on the location dimension of the eclectic theory and is premised on the notion that risks inherent in the institutional characteristics of a country's environment determine the level of FDI inflows the country will receive