| Abstract : | Last three decades will be perhaps be characterized by the dominance of global firms. This was of course due to revolutionary innovations, particularly in transportation and information technology, and its spread requirement innovation in management practices. Over the course of the 1990s, foreign direct investment (FDI) has rapidly become the most important source of earnings for multinational enterprises. Most countries have liberalized their investment regimes, and many provide costly fiscal incentives, in the expectation of the multiple benefits that are typically associated with foreign direct investments.This dissertation attempts to define the role, the functions, and the form a multinational enterprise has in combine with the foreign direct investments as a strategy of expansion.In the first chapter, we analyze why multinational enterprises choose to expand their production in other countries in order to raise their profits and to reduce their costs. In order to achieve that goal they can be horizontally integrated, vertically or both. We also review the structural models of multinational enterprises, which are the multinational, international, and global structure with their advantages and disadvantages. Furthermore, there is a reference in various strategies for international expansion, such as licensing, franchising, subcontracting, and foreign direct investments.Chapter 2, reviews the theories that have been developed about MNEs international expansion and which seek to explain why the MNE will choose to locate production abroad. Theories of the multinational enterprise gained momentum in the 1960’s with the comprehensive works of Hymer, Venron, Coase, Hennart, Buckley and Casson, Dunning and Porter.In chapter 3, we emphasize the importance of foreign direct investments. In a widely-held view, foreign direct investors are believed to increase domestic capital formation and to improve access to export markets and to a comparatively stable source of external financing. This chapter reviews the literature regarding the factors that motivate the firm to engage in production abroad and the factors that influence its choice of location. The literature on the determinants of MNE decisions and FDI location is quite substantial, though arguably still in its infancy. Our theoretical hypotheses come out of modelling firm-level decisions. A large body of literature takes these partial equilibrium predictions of a MNEs FDI decisions and examines how (exogenous) factors, such as taxes and exchange rates, affect these firm-level decisions. A more recent body of literature has begun to frame such MNE decisions in a general equilibrium framework and generates predictions of how fundamental country-level factors affect aggregate country- level FDI behaviour. Regardless of the approach used the interconnectedness of FDI behaviour with trade flows and the underlying motivation for MNE behaviour complicates the analysis. Many strands of the partial equilibrium FDI literature have largely ignored this issue, while the general equilibrium models have begun to grapple with it. In the final analysis, the empirical literature on determinants of FDI is still young enough, so that most hypotheses are still up for grabs. Thus, it is perhaps not surprising that Chakrabarti [2001] finds that most determinants of cross-country FDI are fairly fragile statistically. However, as this survey of the literature reveals, the issues are complicated enough, so that broad general hypotheses, such as taxes generally discourage FDI, simply should not be expected once one takes a closer look. The more insightful and innovative papers in the literature have developed hypotheses about when a factor should matter and when it should not matter, and then find creative ways to test these hypotheses in the data. The ever greater availability of micro-level data should also help in the future to clear some of the muddy waters. Again, the better papers in the literature have been cognizant of how data issues affect interpretation of their results, and this will be a key issue as the literature moves forward.Chapter 4, points out to the link between FDI and economic growth in developing countries. Positive growth effects of FDI in developing countries are anything but guaranteed. We reveal that FDI has a significant impact on home and host countries, especially host developing countries. Evidence has shown that FDI has contributed positively to the balance of payment, competiveness and industrial upgrading in home and host economies.Chapter 5 examines the relationship between environmental taxation and FDI. We analyse another form of taxation, the environmental taxation which is widely discussed nowadays. We find that the impact of FDI on strategic environmental tax policies seems to imply a tendency to higher environmental taxes. Finally chapter 6 briefly reviews the recent trends in FDI worldwide and in Greece especially. In addition, describes what the situation in Greece is and prospects for the future.
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