Attracting Foreign Direct Investment: Applying Dunning's Location Advantages Framework to FDI Advertising

Countries compete intensely for foreign direct investment (FDI) and perform a wide range of activities to attract it. Research on FDI promotion often overlooks the effects of advertising. To fill this gap in the literature, this study analyzes the content of FDI advertising to explain its structure. To guide the analysis, the authors use Dunning's FDI location advantages framework. This framework represents an effective prism through which to view FDI advertising, and Dunning's location advantages are reflected in advertising content. In an effort to shed more light on FDI advertising, the authors first provide an assessment of how advertising content varies by country income classification. Next, using exploratory factor analysis, they identify the five factors represented in FDI advertising: knowledge resources, market attractiveness, economic governance, infrastructure, and natural resources. The findings suggest that high-income countries tend to focus on knowledge resources, while lower-middle-income countries focus on economic governance. Upper-middle-income countries tap into both knowledge resources and economic governance while also promoting the attractiveness of their market.