After years of restricting foreign direct investment (FDI), governments in developing countries are now working to attract external investors, spending large sums of money to attract foreign companies to their countries. In Brazil, for example, competition to attract FDI is estimated to have cost around $300,000 per job created. Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”? Get an original essay These changes are valid because multinational corporations (MNCs) are expected to bring not only jobs and capital, but also new skills and technological skills to national companies. businesses. One such advantage for the company as well as the country is that leakages from MNC subsidiaries to domestic companies constitute “spillover”. But the evidence for the positive ripple effects expected by policymakers and theorists is inconclusive. This summarizes the need to reconsider situations in which FDI can and does have spillover effects, and policy perpetuates practices that encourage such effects. For example, multinational information technology companies in India, such as Texas Instruments and Oracle, send their human resources to the United States for training and upskilling in research and development. Domestic companies then use these skills when these workers change workplaces. The old model approach: The key propositions of the electrical paradigm: Ownership-specific advantages (O): Location advantages (L) Internalization advantages (I) Internationalization theory focuses on imperfection in sectors intermediaries. product markets. The two main types of product market are knowledge flows linking research and development (R&D) to production and component and raw material flows. Internationalization only happens when the company focuses more on reaping profits and maximizing profits by reducing costs. Today's growing economy, every business is aiming for this and these lead to foreign direct investment. Foreign direct investment can take two forms, namely resource-seeking investment and market-seeking investment.1. Ownership: There are many forms of ownership (O) advantages that the multinational can transfer within the multinational enterprise located in different parts of the enterprise at relatively low cost. There are few assets owned by the company that can provide an additional advantage over other competitors. Companies rely on their competitive factors in the internationalization process. Some of them are monopolistic advantages that the company has in its home country in the form of privileges, such as scarcity of natural resources, patent rights, brand, innovation activities, technology and knowledge. These advantages must have variations and particularities and give the international company the choice to compete internationally in a profitable manner, in addition to being transferable between countries and within the company.2. Location: The company must use certain foreign factors (L) in relation to its ingrained domestic core competencies, or as the ownership advantages defined by Dunning. The geographic advantages of different countries are essential in determining which..”