Foreign direct investment and the locational competitiveness of countries

John H. Dunning, Feng Zhang

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


The paper first examines the current state of thinking on the role of resources, capabilities and markets (RCM) and institutions (I) as the main ingredients of the competitiveness of national economies. The paper then empirically investigates how the extent, content and quality of each are associated with the level of foreign direct investment (FDI) to and from the country. Data are primarily drawn from the World Investment Report (UNCTAD) and the Global Competitiveness Report (World Economic Forum). We find that the level of competitiveness does, in general, encourage both inward and outward FDI. Moreover, the I of a country has stronger positive effects on FDI than its RCM. Further investigation shows that the effects of I are particularly strong in countries at the advanced stage of development. The findings of the paper suggest that more detailed future work focusing on countries' institutional advantages promises to yield dividends in terms of insight into the determinants of national competitiveness and FDI.

Original languageEnglish (US)
Pages (from-to)1-30
Number of pages30
JournalTransnational Corporations
Issue number3
StatePublished - Dec 2008

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting (miscellaneous)
  • Economics, Econometrics and Finance (miscellaneous)
  • Political Science and International Relations


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