After studying the content within this chapter, you will:

1. Identify the forces underpinning the rising tide of foreign direct investment in the world economy.
2. Understand why firms often prefer direct investment as a strategy for entering a foreign market over alternatives such as exporting and granting foreign entities the right to produce the firm's product under licence.
3. Appreciate why firms based in the same industry often undertake foreign direct investment at the same time.
4. Understand why certain locations are favoured as the target of foreign direct investment.
5. Appreciate how political ideology influences government policy toward foreign direct investment.
6. Be conversant with the costs and benefits of foreign direct investment for receiving and source countries.
7. Understand the policy instruments governments can use to restrict and to encourage foreign direct investment.