Global trends

Abstract

This chapter examines the role of foreign direct investment (FDI) in the world economy and reviews recent global trends in stocks and flows, as well as the activities of the principal actors, transnational corporations (TNCs). The key development was that the recession in FDI flows came to an end in 1993, thanks to renewed economic growth in some major source countries and the solid growth performances of many developing economies. Investments from developing countries, though small, also played a role in the upturn of FDI flows. As a result, traditional patterns of FDI -- a focus on the developed countries where, in any event, most of the investment stock is located -- are reasserting themselves, although the developing countries appear to be in the process of shifting that pattern in their favour. The underlying trend is for the largest 100 TNCs to become increasingly internationalized, with investments abroad aimed at gaining markets for outputs and access to markets of factors of production. These twin objectives underlie the organization of international production, using various modalities that fall increasingly under the governance of TNCs.