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Agarwal(1980):
1.Theories assuming perfect markets 2.Theories assuming imperfect markets 3.Other theories 4.Theories based on other variables
Other theories
1.The internal financing hypothesis 2.The currency areas hypothesis (the effect of the exchange rate) 3.The hypothesis of diversification with barriers to international capital flows 4.The Kojima hypothesis
The differential rates of return hypothesis 1. :from low rate of return to high rate of return
(mr=mc)
The industrial Organization hypothesis 1: :firm-specific advantages > disadvantages Lall and Streeten (1977) (intangible assets difficult
to sell) (1)Capital (2)management (3)technology(4)Marketing (5)access to raw materials(6) Economies of scale(7) bargaining and political power :explain why firms invest in foreign country :why choose A not B