How do political institutions influence foreign direct investment? The field of international political economy (IPE) has seen enormous continuous changes both in the past and in recent times. The climate and conditions within the theoretical and practical aspects of the industry are constantly evolving and have led to the formation of an unstable political and economic landscape. This essay will focus on one aspect of IPE that has grown relatively quickly to become extremely influential and important to developments in the sector, that aspect is multinational corporations (MNCs) and their foreign direct investments (FDI). The role of multinationals and the importance of foreign direct investments are multiple in the international sphere; the use of foreign direct investments not only constitutes a possible reduction in production costs and an increase in income for the investor, but foreign direct investments today also represent an important aspect for state economies. Foreign direct investment now represents a large part of the GDP of many states and is also a vital part in advancing economic growth and development in the developing world. The dynamics of foreign direct investments are complex, as are the actors involved; Multinational corporations and state governments operate within different perimeters. The goals and objectives of the actors involved are not always synchronized, but nevertheless the results could be mutually beneficial. Over time, numerous studies have been conducted on the dynamics of foreign direct investments. This essay will focus on the role of national and international institutions in relation to foreign direct investment. What role institutions play in attracting foreign direct investment, whether some types of institutions manage to attract more foreign direct investment than others, and why this is the case are central questions to evaluate in understanding the relationships between multinationals, foreign direct investment and states. The analysis will focus on three different dimensions of...... half of the document......//econ.worldbank.org OECD Statistics FDI Inflows, Russian Federation. Available at: http://www.oecd-ilibrary.org/economics/country-statistical-profile-russian-federation_20752288-table-rus [accessed 14 January 2014]OECD country risk classifications of participants agreement on exports benefiting from official support Credits. Available from: http://www.oecd.org/tad/xcred/cre-crc-current-english.pdf [accessed 15 January 2014]UNCTAD StatisticsFDI Afflows, available from: http://unctadstat.unctad.org/TableViewer /tableView.aspx [accessed January 17, 2014]World Bank StatisticsForeign Direct Investment Inflow Statistics. Available from: http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD [accessed 14 January 2014] Websites Brunei | House of Freedom. 2014 [ONLINE] Available at: http://www.freedomhouse.org/report/freedom-world/2008/brunei#.UtqTsM-vncc. [Accessed 16 January 2014].