REVIEW OF FDI THEORY IN THE KNOWLEDGE–INTENSIVE ECONOMY

Abstract

International flow of capital in the form of Foreign Direct Investment (FDI) is considered to be the primary form of capital transfer in the global economy. It plays an important role among other forms of international capital flows, due to the intensity of its streams and its strength of impact on local economies. Host countries use FDI to finance activities such as industry restructuring and transfer of technology. The aim of this paper is to present current achievements in the field of theoretical explanations of FDI – its main motives. The article relates also to current selected trends in FDI flows during the economic downturn caused by the recent financial crisis. Above all ,however, this paper aims at showing FDI theories in terms of a knowledge intensive economy.