Abstract
This chapter examines the way in which economic and financial linkages arising from conventional trade and investment activities are contributing to the creation of a truly global economy. These linkages establish the framework for the growth and operation of multinational enterprises, which will be examined in the following chapter. The present chapter is divided into three sections. The first briefly describes the basic structure of the global economy from contemporary data. The second section deals with trade linkages, the flows of imports and exports among countries. The third section deals with investment linkages, both in terms of annual flows (i.e., net new investment per time period) and the patterns of international ownership (i.e., aggregate investment stocks) that result from them. The multinational enterprises (MNEs) that account for a substantial portion of these international investment flows and stocks are analyzed in the following chapter. The international financial and monetary regimes that govern and facilitate trade and investment linkages are discussed in chapter 7 below.
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