Theories of Direct Private Foreign Investment and Multinational Behaviour

and Multinational Behaviour Sanjaya Lall This paper is intended to provide a summary and a synthesis of recent theories of foreign investment in the manufacturing sector and of explanations of the growth of multinational companies (MNCs). Since the field of foreign investment is heavily dominated by MNCs, a realistic explanation of one necessarily serves in great part as an explanation of the other. An attempt is made, wherever possible, to draw a distinction between "multinationals" proper, defined as the very large direct investors which have subsidiaries in several countries, and "other" foreign investors, smaller and less widespread.