How to Attract Sustainable Foreign Direct Investment?

In the light of increasingly more sophisticated firm-internal divisions of labour as well as a tighter competition among governments for FDI, we discuss the relevance of production fragmentation for FDI attraction policies. We conclude that in order to foster the sustainability of FDI, governments need to increase the coherence between location factors and stages in the value-chain transferred by MNEs. A sustainable path of FDI requires a sustainable path of a change in the factor intensity of production.