A theoretical and econometric study of multinational enterprise direct international business investment

Over the years research of the Multinational Enterprise(MNE) and the Direct Foreign Investment(DFI) phenomenon has yielded a number of theories and propositions--and work continues. Each work however, appears to reflect a particular discipline\u27s school of thought. The contribution of this multidisciplinary study is: (1) in ascertaining which sets of propositions, when combined, best model (IBIModel) Multinational Enterprise motivation in Direct Foreign Investment; and, (2) in deriving from practice, theory, and the IBIM a statistically testable macro-econometric investment relation (MGAParadigm). The objective of this work is therefore to survey several significant theories explaining the MNE and/or DFI phenomena via research in three disciplines (economics, management, and finance); assess motivation in the context of the pure economic profit concept and MNE strategic planning practice; propose a cogent set of hypotheses that recognize some of the fragmented and diverse theoretical literature; and, finally, pose and partially evaluate the IBIM by statistically testing its derivative, the MGAP, in terms of macroeconomic data for market economies in twelve industrial countries. The twofold, intuitive and statistically tested, IBIModel reflects: (1) the conclusion that the primary, all encompassing, objective of an MNE is to maximize gain; and, (2) the statistically tested inference that MNEs invested to accrue marginal gain via resource factor arbitrage availed in: (a) financial market disequilibria; (b) advantages in scale of assets and economies, flaws, or opportunities in the market; (c) differentials, and/or, (d) market inefficiencies due to economic policies