Inward foreign direct investment in emerging economies: a review and future research avenues

Abstract

Purpose Given the surge in foreign direct investment (FDI) in emerging economies (EEs) during the past four decades, inward FDI (IFDI) has spawned a rich, scholarly conversation on the topic. This paper aims to review the literature regarding EE IFDI determinants and the impact of IFDI on those economies. It also aims to provide some future research directions. Design/methodology/approach A systematic review with thematic analysis of 372 articles on the topic, published between 1991 and 2021, is undertaken. In addition to using the relevant keywords, the snowballing approach was used to manually track the literature. Findings This review highlights EE IFDI determinants such as institutional quality, corruption and intellectual property rights, regional trade agreements and distances, formal and informal institutions and their interactions, national and subnational diversity and policy expectations. Further, IFDI impacts EEs both at macro- and micro-levels. This review also indicates a substantial increase in research during the period 2000 to 2010 and a decline thereafter; it also indicates Africa and Latin America being under-researched, with a focus on Africa recently increasing. Research limitations/implications Rich research opportunities exist in examining the mechanisms (mediators) and conditions (moderators) that influence relationships between the antecedents of IFDI and their outcomes. Further opportunities exist in examining the role of the context and in undertaking a multilevel analysis. Originality/value This review provides an understanding of what influences multinational enterprises’ FDI to EEs and how it impacts those economies. It also raises potential future research questions. It provides a holistic understanding of the chosen scope and domain.