How Do Political Institutions Affect Foreign Direct Investment?The field of international political economy (IPE) has seen enormous continuous changes in the past and recently . The climate and conditions in the theoretical and practical aspects of the field are constantly changing and have led to the formation of an unstable political and economic landscape. This essay will focus on one aspect of IPE that has relatively quickly become influential and important to developments in the field, this aspect is that of multinational corporations (MNCs) and their foreign direct investments (FDI). The role of multinationals and the importance of FDI are multifaceted in the international sphere; The use of FDI not only makes it possible to reduce production costs and increase the income of the investor, but FDI today also constitutes an important aspect for the economies of states. FDI today accounts for a large portion of the GDP of many states and is also an essential element in advancing economic growth and development in the developing world. The dynamics of FDI are complex: the actors involved; Multinationals and state governments operate in different scopes. The goals and objectives of the actors involved are not always in sync, but the results could still be beneficial for both. Numerous studies have been carried out over time on the dynamics of FDI. This essay will focus on the role of national and international institutions in relation to FDI. What role do institutions play in attracting FDI, whether certain types of institutions succeed in attracting more FDI than others and why the situation is this way, are central questions to assess to understand the relationships between multinationals, FDI and States. The analysis will focus on three different dimensions of... middle of document ......//econ.worldbank.orgOECD Statistics FDI Inflows, Russian Federation. Available at: http://www.oecd-ilibrary.org/economys/country-statistical-profile-russian-federation_20752288-table-rus [accessed January 14, 2014] OECD country risk classifications of participants in the Arrangement on officially supported exports Credits. Available at: http://www.oecd.org/tad/xcred/cre-crc-current-english.pdf [accessed January 15, 2014] UNCTAD Statistics FDI Inflows, available at: http://unctadstat .unctad.org/TableViewer /tableView.aspx [accessed January 17, 2014]World Bank StatisticsFDI flow statistics. Available at: http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD [accessed January 14, 2014]WebsitesBrunei | Liberty House. 2014 [ONLINE] Available at: http://www.freedomhouse.org/report/freedom-world/2008/brunei#.UtqTsM-vncc. [Accessed January 16 2014].