ABSTRACT
John Dunning’s empirical study of American foreign direct investment (FDI) in the UK noted that US investments had involved very little financial capital imports. This chapter argues that a number of non-conventional types of FDIs – such as the free-standing company – that fit awkwardly in a model where multinational firms arise to exploit abroad their firm-specific advantages, can be explained by looking at the role of these institutions in the international transfer of financial capital. There are two main dimensions that can be used to describe and categorise how financial capital is transferred across national boundaries. One is whether the transfer takes place through price or hierarchical means. Bonds and loans are price modes of transfer, while equity is the hierarchical mode. The second dimension is whether savers deal directly with investors, or whether the process is intermediated.
