Abstract
This paper reviews the literature that examines the effects of economic and financial crises on foreign direct investment (FDI). Economic and financial crises have different impacts on FDI flows. Often, the amount of FDI flow is negatively affected by the crises. This paper contributes to international business (IB) literature by providing a basic framework of how FDI is affected by the crisis. This paper adopts the literature review research method. The paper finds two main effects of crises on FDI: indirect effects (macro level) and direct effects (micro level). The behaviour and responses of multinational enterprises (MNEs) to crises are divided into three fundamental types: escape, defensive, and risky behaviour. Theoretical and practical contributions and future research are also provided.
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