Foreign Direct Investment

   A decision to undertake foreign direct investment (FDI) in a particular country is the outcome of a decision process where projected revenues and costs are evaluated. Increased knowledge of a foreign country reduces the cost and the uncertainty of operating in a foreign market and should increase the probability of an investment made in that country. Experience creates increased market knowledge and uncertainty reduction, and experience is therefore considered an owner-specific advantage in the so-called eclectic theory of international production.