TABLE OF CONTENTS
Page
PREFACE iii
ACKNOWLEDGEMENTS iv
ABBREVIATIONS xv
OVERVIEW . xvii
PART ONE: FDI SET TO RECOVERY;
CHAPTER I. GLOBAL FDI GROWTH SET TO RESUME .3;
A. FDI inflows down again - but recover y is on its way 3;
1. An uneven picture...3;
2. International production continues to grow 8;
3. Many countries have not realized their potential 12;
a. Indices of Inward FDI Performance and Potential 12;
b. The Outward FDI Performance Index . 16;
B. Outward FDI from developing countries is becoming important 19;
C. Changing sectoral distribution 29;
D. Prospects: growth set to resume 31;
Annex to chapter I. How transnational are TNCs? 37;
CHAPTER II. REGIONAL FDI TRENDS: A MIXED PICTURE 39;
A. Developing countries 39;
1. Africa: a turnaround...39 ;
a. Inflows regain momentum .. 40;
b. Policies increasingly liberal 42;
c. Natural resources and services dominate .. 45;
d. Prospects are positive 46;
2. Asia and the Pacific: a rebound 49;
a. A mild upturn 49;
b. Policies improved further 52;
c. Services FDI on the rise .52;
d. Promising prospects 56;
3. Latin America and the Caribbean: another disappointing year 58;
a. A continuous decline .. 58;
b. Policy developments: continued liberalization ...64;
c. Sectoral patterns 64;
d. Better prospects ahead .67;
B. Central and Eastern Europe: awaiting the boom 69;
1. Inward FDI sharply down, outward FDI sharply up 70;
a. Inward FDI: new EU members performed less well than other CEE countries . 70;
b. FDI outflows: robust increase . 72;
2. Implications of EU membership for national policy 75;
3. A shift towards services brings about structural change 78;
4. Prospects: again sunny . 79;
C. Developed countries: the decline continues, but prospects are good 80;
1. Uneven trends ..80;
2. Policy responses85;
3. Services dominate .88;
4. Prospects: FDI will pick up again, but not everywhere . 89;
PART TWO: THE SHIFT TOWARDS SERVICES;
INTRODUCTION 95;
CHAPTER III. THE GROWTH OF FDI IN SERVICES AND ITS IMPLICATIONS..97;
A. Changing patterns of FDI in services 97;
1. The growth of services FDI and its changing mix ...97;
2. Changing distribution among home and host countries . 99;
a. Outward FDI .99;
b. Inward FDI ..101;
3. Transnationalization is lower in the services sector and differs by industry and country 101;
4. Non-equity forms of investment are common in services.. 104;
B. Players and driving forces 105;
1. Goods TNCs invest in services 107;
2. Service TNCs are expanding rapidly 107;
a. The players .107;
b. M&As take the lead in entry patterns .111;
c. Catching up with manufacturing TNCs? . 114;
3. Drivers and determinants . 115;
4. Most services FDI is still market-seeking – but this is changing 118;
C. Impact on host countries 123;
1. Financial resources and balance of payments 126;
2. Services provision, competition and crowding out 128;
3. Technology, knowledge and skills 132;
4. Export competitiveness 135;
5. Employment ...137;
6. An assessment 137;
Annex to chapter III. What are services? Classifying invisibles .145;
CHAPTER IV. THE OFFSHORING OF CORPORATE SERVICE FUNCTIONS: THE NEXT GLOBAL SHIFT?..147;
A. The tradability revolution 1481. The tradability of services.148;
2. Limitations to offshoring . 149;
3. Is the globalization of IT-enabled services different from that of manufacturing?..152;
B. Future prospects for the offshoring of services 153;
C. Outsourcing vs. captive business models . 156;
1. What determines how offshoring is undertaken? 156;
2. A new breed of TNCs provides services globally...157;
D. Search for competitiveness drives corporate offshoring 159;
1. FDI related to the offshoring of services is still concentrated .. 159;
2. Cost reduction and improved quality are key drivers 164;
3. European TNCs offshore less than their United States rivals 168;
E. Impact on host countries 169;
1. India ...169;
2. Other Asian locations . 174
3. Latin America and the Caribbean . 174;
4. Africa ...174;
5. Central and Eastern Europe..175;
F. Implications for home countries ..176;
PART THREE: NATIONAL AND INTERNATIONAL POLICY CHALLENGES;
INTRODUCTION183;
CHAPTER V. NATIONAL POLICIES 185;
A. Host-country policies on services are key to development gains1851. Countries are opening up to FDI in services 185;
2. Benefits from FDI in infrastructure-related services: the case of privatization .. 187;
3. Promotion of FDI in services .. 194;
a. Investment promotion agencies increasingly target services 194;
b. The role of incentives 196;
c. EPZs in developing countries see potential in services .201;
d. Infrastructure and skills development .203;
e. Regulatory issues related to data protection and intellectual property . 207;
4. Benefiting more from services FDI: upgrading and linkages 207;
B. Home countries: the challenge of adapting .208;
1. The reaction to offshoring in the United States . 209;
2. The European response 210;
a. The United Kingdom 210;
b. Other European responses 211;
3. Reactions in other developed countries 212;
4. Meeting the challenge of adapting ...212;
C. Conclusions .212;
CHAPTER VI. NATIONAL AND INTERNATIONAL POLICIES: A COMPLEX AND DYNAMIC INTERACTION 221;
A. The growing multifaceted network of services IIAs 221;
1. The evolving nature of approaches covering FDI in services 221;
2. Salient features 225;
B. Complexities and challenges ...231;
C. National and international policies: a complex and dynamic interaction...233;
D. Conclusion: striking a development-oriented balance 235;
REFERENCES ..243;
SELECTED UNCTAD PUBLICATIONS ON TNCs AND FDI .. 423;
QUESTIONNAIRE 437.