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The order of this list is random. According to Noorbakhshs, Paloni and Youssef (2001), foreign investors are attracted to regions that offer a combination of the location factors. The location factors are discussed separately in the next paragraph.

2.2.1 Cost factors

This paragraph contains theoretical information about the cost factor as one of the location factors. The determinants that are criticized are labour costs and cost of materials.

2.2.1.1 Labour Cost

The costs linked with the profitability of investment are one of the major determinants of investment (Asidu, 2002) . The rate of return on investment in a host economy influences the FDI decision. Asiedu (2002) noted that the lower the GDP per capita, the higher the rate of return and, therefore, the FDI inflow. Charkrabarti (2001) claims that wage as an indicator of labour cost has been the most arguable of all the potential determinants of FDI. There is no unanimity even among the comparatively small number of studies that have explored the role of wage in affecting FDI: results range from higher host country wages discouraging inbound FDI, to having no significant effect or even a positive association ( Dunning, 1989). Goldsbrough (1979) and Shamsuddin (1994) demonstrate that higher wages discourage FDI. Tsai (1994) obtains strong support for the cheap-labour hypothesis over the period 1983 to 1986, but weak support from 1975 to 1978. Charkrabarti (2001) stated that empirical research has found relative labour costs to be statistically significant, particularly for foreign investment in labour-intensive industries and for export-oriented subsidiaries. However, when the cost of labour is relatively irrelevant (when wage rates vary little from country to country), the skills of the labour force are expected to have an impact on decisions concerning FDI location. This is not the case for the investments in this case study, which is more knowledge based than labour intensive.

Cheap labour is another important determinant of FDI flow to developing countries. A high wage-adjusted productivity of labour attracts efficiency-seeking FDI both aiming to produce for the host economy and for export from host countries. Studies by Wheeler and Mody (1992), Schneider and Frey (1985), and Loree and Guisinger (1995) show a positive impact of labour cost on FDI inflow. Countries with a large supply of skilled human capital attract more FDI, particularly in sectors that are relatively intensive in the use of skilled labour.

2.2.1.2 Cost of Materials

The analysis above leads to two variables that can be measured to determine the importance of the cost factor that is labour cost (wages). The availability of raw material and cheap labour can be of crucial importance in the choice of location.

The return on investments is not important for this study, because this is not region-constrained, so it is not an important factor for a location choice. FDI uses low labour costs and ava本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。