The robustness of a theory in social science comes in its capacity to provide reliable explanations across different cases with similar conditions. In other words, a good theory allows for generalizable claims. However, it is important to recognize that theories, in particular social and historical contexts, are derived. These contexts influence the choice of variables and often what is deemed important or not important to examine. This does not mean a theory cannot transcend the context in which it was developed. But when the context changes in profound ways, it is necessary to reassess.

In the study of foreign direct investment (FDI), the most prevalent theories were developed in a world of the late twentieth century, where capital was presumed to be private, advanced democracies shaped the international system, and more trade and increased capital flows were thought or hoped to foster greater convergence toward democracy and liberal society. Now, in the twenty-first century, the global economy is characterized by increasing amounts of state capital, an international system in which the dominance of advanced democracies is increasingly contested, and in which democracy around the world is in decline. The rise of China is the crucial factor in much of this new landscape. But China is not alone. Many fast-growing emerging markets have large state sectors and de