Advantage of ownership

Background

20 since the 1950s, the unprecedented development of international direct investment has aroused widespread concern in the international theory of economics, theories of international direct investment over the practice has enjoyed rapid together develop. University of Reading, Professor John Dunning On the basis of others' research results on the proposed international production compromise theory that is "OIL three patters." "O" is the ownership advantages (Ownership advantages), including intangible assets and business advantages of scale advantages ; "I" is the internalization advantages (Internalization advantages), there is the case of transaction costs in the market, companies use internal market to achieve the exchange and use of intangible assets and intermediate products, external obstacles can be overcome market failure, transaction costs tend to a minimum; "L" is the location advantage (location advantages), including the host country's natural endowment and the host government's political economic system, policies and regulations and infrastructure formed advantage. Dunning believes that only companies but also has the advantage of ownership, when internalization advantages and location advantages to international direct investment, if the lack of regional advantages, companies can only be produced in the country. He believes location advantage is a necessary condition for international direct investment.

Three

Asset advantage ownership

assets of ownership advantages, means the owner of a valuable asset.

tradable ownership advantages

tradable ownership advantages, means the owner of intangible assets.

advantage economies of scale

advantage of economies of scale, economies of scale refers to research and development, innovation, and low cost advantages.