Location theory: Location of FDI
Location theory is frequently applied by researchers wanting to understand factors that influence where multinational firms (MNCs) choose to locate their foreign operations. Typically lacking data on the production costs of individual MNCs or data on anMNC’s costs in countrieswhere the firm does not operate, researchers tend to study features of the different locations that should make them more or less attractive, such as a country’s corporate tax rate. These features include factors related to a country’s policy, economy, and technology environments, and strategic considerations for individual MNCs. These are discussed in detail below.