Localization and foreign direct investment : exemplified by Norwegian shipping in Singapore

Abstract

This thesis seeks to explore the determinants of localization. Dunning’ eclectic paradigm explains foreign direct investment (FDI) by the profitability of combining the ownership and internalization advantages of companies with country-specific location advantages. National competitive advantage thus influences the location decision, and the competitive advantages of countries are important determinants of the localization of FDI. Governments play an important part in shaping the framework and conditions within which the economic activity takes place, and thereby affect the attractiveness of countries as recipients of FDI. The thesis further provides an analysis of Norwegian shipping in Singapore. It will be evident that the Singapore government has played an important part in shaping the framework, and has created a business environment regarded by foreign investors as very attractive. Predictability and stability in the operating environment and a facilitated infrastructure seem more important than micro-level incentive systems for understanding localization of Norwegian shipping companies in Singapore.