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eral assumption was that there is no such thing as a perfect market. According to Hymer (1976), a company must possess some firm-specific advantages in order to offset the domestic company's advantage (culture, language, local network, etc.). Through the years, several ways of obtaining this kind of advantages has been presented. They include, but are not limited to: low wages (Grubel, 1968), having access to natural resources used in production (Lall and Streeten, 1977), having asses to superior technology and marketing (Caves, 1971), etc. By using its advantages, a MNC can create a situation of oligopolistic or monopolistic competition. In the literature of FDI, there is a general consensus about FDI having a positive impact on the technological development of a country (Wang, Blomström, 1992; Moosa, 2002) and the economic growth that follow.

The Product Life Cycle Theory 产品生命周期理论
This theory is generally seen as the first major theory addressing the rationale behind FDI. In his work, Vernon (1966) criticized previous theories only addressing the cost of factors of production. Instead, he addresses the role knowledge and communications as important factors in the process of developing and producing new products. He outlines three phases a product typically goes through - the innovation phase, the maturity phase and the standardization phase. In the innovation phase, demand for the product emanates mainly from the domestic market. The price is inelastic, making the price high. As the product matures, it enters the international market. In this phase, there is an increased demand from foreign countries. Foreign competitors are also starting to copy the product at this phase. To stay competitive, the exporting firm is forced to set up subsidiaries in the targeted countries. At this stage, the driving force for FDI is to reduce production costs, hence withholding or increasing its competitive advantage. At the last stage, full economy of scales is achieved by the company. This by standardization of its products and by moving production to low wage countries, i.e. former importers become exporters.

The Internalization Theory 内部化理论
Welch and Luostarinen (1988) describe internationalization as 'the process of increasing involvement in international operations'. It was first propounded by Buckley and Casson (1976), and is another of the major FDI theories. It questions the assumptions made in neoclassical economics such as perfect competition and access to full information. The general focus of this theory is that a company prefers an internal internalization process, rather than with an external counterpart. The main advantage of keeping a process internal in this theory is due to time lag, price negotiations and supply uncertainty. An illustration of this concept would be a company using a specific production factor intensely, acquire a producer of this factor, thus removing the supply uncertainty. An illustrative example of this event would be a paper-producer acquiring a wood-supplier instead of buying wood on the market. A well-known model addressing the process of internalization is the Uppsala internationalization process model, formulated in 1977 by the two Swedish economists Johanson and Vahlne by doing empirical observations on Swedish manufacturing firms. It describes how a firm gradually increases its involvement in foreign countries as a process ha