Geography of foreign direct investment
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Geography of foreign direct investment book
The geography of production is shaped not only by national firms and governments, but also by foreign-owned (controlled) firms and organisations that impose international rules. Some preferential trading or integration agreements such as common markets permit the free movement of factors among member countries on the condition that factors originating in partner countries are not subjected to discrimination. The promotion of geographical and sectoral factor mobility results in more efficient allocation of resources from the group’s standpoint. These improvements in the locational advantages of the group for business are due to the free internal factor flow from low-to high-productivity locations and businesses within the common market. In this situation, factors respond to signals that include demand, higher productivity and higher returns within a common market.