Introduction

Abstract

International production – activity under the aegis of transnational corporations (TNCs) – continues to grow strongly. The main agent of international production, foreign direct investment (FDI), does not flow evenly across countries. This unevenness persists, and in some cases increases, over time. While this has long been a feature of the international economy, there are significant elements of change (WIR98). The growth of FDI in the past two decades or so has been accompanied by changes in its geographical pattern, indicating shifts in the investment climate in host countries and in the economic factors driving the location of international production. New locations are becoming attractive relative to old ones. The activities relocated across countries by direct investment are changing. Within TNCs, the specific corporate functions undertaken by parent firms and foreign affiliates (ranging from marketing to research and development (R&D)) are changing in scope and depth. Sources of FDI are also increasing and shifting.