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Internationalization, Technology and Services

Edited by Marcela Miozzo and Ian Miles

This book examines the way in which the increasing internationalization of services, including the operation of multinationals in this sector, interacts with the process of innovation in services. The book challenges the theoretical traditions that have developed around the analysis of service innovation and internationalization, and argues for a new research agenda. The distinguished contributors address many of the most pertinent issues and adopt a variety of theoretical and empirical approaches to enrich the debates.
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Chapter 4: Internationalization of Services: Are the Modes Changing?

Zbigniew Zimny and Padma Mallampally


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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