Strategic groups of countries: An empirical study of government policies toward foreign direct investment and their convergence over time

This dissertation contributes to foreign direct investment, strategic group, and organizational ecological theories and research by addressing three questions about foreign direct investment (FDI) policy changes: (1) Do these policies change with competition factors, and/or are they dependent on the characteristics of the country such as market size? (2) Are these policies converging across countries over time as countries compete for investment? (3) Which policies help/hinder countries in attracting investment over time?;This study finds that FDI policies are affected both by internal country characteristics and common history as well as by competitive factors based on strategic group membership. In general, the findings show that, larger, more developed, skilled, resource-rich, government-managed market, democracies have more restrictive FDI policies. Differing conditions determine whether divergence or convergence occurs within a country's strategic group. The conditions include the availability of energy (oil).;The question of convergence to its strategic group's policies contributes to a country's ability to attract FDI is also addressed in this study. Most groups show that convergence with the group mean on policies of controls over cash and ownership and demand for firm's output generates higher level of FDI. However, divergence from the strategic group mean for income tax rates and import restriction leads to higher levels of FDI.