According to the eclectic theory that explains FDI,an internalization advantage is the advantage of locating a particular economic activity in a specific location because of the characteristics of that location.

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The eclectic theory, or OLI framework, suggests that an internalization advantage refers to a firm's preference to control its foreign operations rather than licensing, due to reasons such as reducing transaction costs or protecting proprietary technology, rather than the advantages of a specific location. Location advantages are considered separately within the framework.

According to the Eclectic Theory That Explains FDI,an Internalization Advantage