The theory of comparative advantage was put forward by Japanese hitotsubashi university professor and economist Kiyoshi Kojima in the mid-1970s. Kiyoshi Kojima believes that each country's economic situation has its own characteristics, so the theory based on American foreign direct investment cannot explain Japanese foreign direct investment. He believes that the success of Japan's foreign investment is mainly due to the fact that investment enterprises can use the principle of international division of labor to transfer the domestic departments that have lost their advantages abroad and establish new export bases; Concentrate on developing China's industries with comparative advantages, make the domestic industrial structure more reasonable and promote the development of foreign trade. From this, he summed up the "Japanese-style theory of foreign direct investment", that is, foreign direct investment should start from the industries that have been or will be at a comparative disadvantage in the investing country, that is, the marginal industries. Summarizing his comparative advantage theory, we can highlight the following three aspects: 1. Abandoning the viewpoint of "imperfect competition in the market", and according to the specific conditions of the investing countries, this paper puts forward practical foreign investment strategies. 2. Abandon the view of "monopoly advantage", emphasize the principle of comparative advantage, and continue to maintain the traditional principle of international division of labor. 3. Abandon the viewpoint of "trade substitution" and put forward the development strategy of "trade creation". Compared with other theories, this theory of explaining foreign direct investment from the perspective of international division of labor is obviously unique, which is undoubtedly an impact on traditional international direct investment. Kiyoshi Kojima only reflected and explained the situation of Japan's foreign direct investment, which was still in the primary stage in 1960s and 1970s, from the differences between Japanese-style foreign direct investment and American-style foreign direct investment, from expounding the outward transfer of marginal industries and from policy suggestions. This theory can neither explain the foreign direct investment activities of the United States, which was in its heyday at that time, nor fully explain the new situation of Japan's rapid rise of foreign direct investment after the 1980s. It can be said that this theory has strong characteristics of the times.

The systematic research on the theory of international direct investment began with the monopoly advantage theory of American economist S. Stephen S. Harmo, which is called the cornerstone of contemporary foreign direct investment theory. This theory was first put forward by Harmo of Massachusetts Institute of Technology in his doctoral thesis Internationalization of Domestic Manufacturers: A Study on Foreign Direct Investment.

According to this theory, the foreign direct investment of American multinational companies is determined by their monopoly advantages. These advantages mainly include:

1 capital advantage. In order to adapt to economies of scale and overcome the high risks of foreign direct investment, enterprises generally need to have advantages in capital. This advantage can come from the following two aspects: first, the huge amount of funds owned by enterprises, and second, the strong ability to raise funds. The second aspect is the most important. Harmo believes that American multinational companies can easily obtain loans from various financial institutions, including loans from host banks and other multinational banks, which is difficult for ordinary enterprises to do.

2 technical advantages. New products and processes are the most important components of technological advantages. Through its huge scientific research team and abundant funds, multinational companies have continuously developed new products and new processes, which have doubled or even dozens of times the production efficiency, thus offsetting the unfavorable factors of high cost of transnational investment.

3 Scale advantage. Through the vertical or horizontal integration of foreign direct investment, multinational companies can achieve the production scale that the host country enterprises can not achieve, thus reducing costs and gaining competitive advantages.

4 organizational management advantages. Excellent management talents, unified management system and organizational structure with good market response, as well as the ability to obtain global market information quickly and comprehensively, make multinational companies have organizational and management advantages that ordinary enterprises do not have.

5 Reputation and trademark advantages. A long history, excellent reputation and the resulting well-known trademarks have become sharp tools for multinational companies to consolidate the old market and open up new markets, which is also difficult for ordinary enterprises to own.

The above five advantages are the monopoly advantages of multinational companies put forward by Harmo in theory. In his view, foreign direct investment by multinational companies is not the pursuit of direct profits, or the difference in profits cannot explain foreign direct investment. Monopoly advantage is the fundamental reason for multinational companies' foreign direct investment, and they expect to get long-term benefits. Subsequent research points out that the advantages of knowledge assets are more important, and technical knowledge is the core part of enterprise assets, which is in line with the characteristics of today's information economy era or knowledge economy era. He believes that the motivation of direct investment by multinational companies stems from market defects. First of all, enterprises in different countries often compete with each other, but market defects mean that some companies are in a monopoly or oligopoly position, so these companies may profit by owning and controlling multiple enterprises at the same time; Secondly, in the same industry, different enterprises have different business capabilities. When an enterprise has the advantage of producing a certain product, it will naturally try its best to maximize it. These two aspects illustrate the possibility of transnational corporations and direct investment. Harmo further pointed out that from the perspective of eliminating market obstacles in the host country, the advantages of multinational companies have compensation effect, that is, they can at least offset the advantages of local enterprises in the host country. Hamo's tutor, Gindberg, further extended this and listed various possible compensation advantages, such as trademarks, marketing skills, patented technology and proprietary technology, financing channels, management skills, economies of scale and so on. The theory of monopoly advantage has opened up a new research field for international direct investment in theory, making the theoretical research of international direct investment an independent discipline. This theory not only explains that transnational corporations invest horizontally to give play to their monopoly advantages in a wider scope, but also explains that some processes, especially labor-intensive processes, transfer to foreign production for maintaining their monopoly position, which has a great impact on the development of transnational corporations' theory of foreign direct investment.