PREST/CRIC Studies in Science, Technology and Innovation series
Edited by Marcela Miozzo and Ian Miles
Chapter 4: Internationalization of Services: Are the Modes Changing?
Zbigniew Zimny and Padma Mallampally INTRODUCTION1 One of the striking features of globalization in recent decades is the shift in the modes of internationalization of economic activity towards transnational corporation (TNC)-related modes and transactions. As a result, according to estimates by the World Investment Report 2001, in 2000, the value of goods and services sold by foreign aﬃliates of TNCs was more than twice that of exports: $16 trillion versus $7 trillion (UNCTAD, 2001, p. 10). Foreign direct investment (FDI) and trade have become increasingly interconnected,2 and the role of TNC-related trade in total trade is signiﬁcant. For example, in 2000, exports of foreign aﬃliates from host countries alone amounted to 46 per cent of world exports. In the United States – the largest home and host country for foreign direct investment (FDI) in the world – TNCs, national and foreign, account for three quarters of total exports. Over a third of the total is intra-ﬁrm exports (UNCTAD, 1999, p.232). Although these data cover both goods and services, goods dominate and, consequently, these relationships are characteristic of the internationalization of goods rather than services. The objective of this chapter is to examine the role of TNCs in international transactions in services, whether this role has changed, and whether the modes of internationalization in services are becoming similar to those characteristic of internationalization in goods. The chapter is organized in two parts. First, we review brieﬂy the reasons why the modes of delivery of, or transactions...
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