Foreign Direct Investment, Industry Substitutions and Investment Interest

On the basis of oligopoly competition, this paper conducts theoretical research into the relationships between changes of product species and national interest in international investments. In bilateral economic relations, relative to foreign countries, if substitutions to foreign industries form direct investment to foreign countries, this investment can improve their own welfare. And foreign country's welfare may lose under certain conditions; vice versa. Differences in national investment regimes and investment policies affect the economic welfare. International trade in the real world shows that countries involved in international trade and foreign investment may obtain international economic interest, also get economic damage under certain situations, which result in international economic frictions and disputes. This paper discusses the interest changes of international investment from a perspective that foreign direct investment forms industry or product substitutions to host countries.