ABSTRACT
There is now a concensus of opinion that the propensity of an enterprise to engage in international production, that is, production financed by foreign direct investment, rests on three main determinants: first, the extent to which it possesses (or can acquire, on more favourable terms) assets 1 which its competitors (or potential competitors) do not possess; second, on how far it is possible, and in its best interests, to lease these assets to other firms, or make use of them itself; and third, on whether it is more profitable to exploit these assets in conjunction with the indigenous resources of foreign countries or with those of the home country. The more the ownership-specific advantages possessed by an enterprise, the greater the inducement to internalise them, and the wider the attractions of a foreign rather than a home country production base, the greater the likelihood that an enterprise will engage in international direct investment.
