The Shift Towards Services

WIR04 presents the latest trends in foreign direct investment and explores the shift towards services, with a special analysis of offshoring service activities.

Part One discusses recent global and regional trends in FDI and international production by TNCs. Global FDI flows bottomed out in 2003, but there were some regional differences. The sectoral pattern of FDI is shifting towards services. Outward FDI from developing countries is becoming significant. There is also optimism that inflows to these countries will increase in 2004 and beyond.

Part Two deals with FDI in services - an important but often neglected area of FDI in the context of development. It examines the shift of FDI towards services with a focus on the entry of TNCs into new service areas. Services FDI, especially in intermediate and infrastructure services, affects the economic performance of a host-country in all sectors. The offshoring of corporate services is taking off rapidly, thanks to advances in information and communications technologies. However, the potential of such offshoring can only be harnessed if countries adopt appropriate policies.

Part Three analyses key issues relating to national and international policies on FDI in services. As many services are deeply embedded in the social, cultural and political fabric of host societies, the impact of FDI on those services could be far-reaching. Therefore, national policies matter - not only to attract FDI in services, but also to maximize its benefits and minimize its potential negative impacts. The proliferation of international investment agreements (IIAs) covering FDI in services has resulted in a multifaceted and multilayered network of international rules that affect national policy-making.

The WIR04 includes a substantial statistical annex, which is also available on CD-ROM.

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21 Sep 2004