World Investment Report 1995

Transnational Corporations and Competitiveness

image of World Investment Report 1995

This fifth edition of the World Investment Report (WIR) documents the continuing growth of foreign direct investment (FDI) in developing countries. It analyzes the impact of FDI on the competitiveness of both developed and developing countries. The Report also discusses the policy implications for the enabling environment to promote inward as well as outward FDI and the key issues to be taken into account in multilateral negotiations. For the first time, WIR indexes transnationality that takes into account the respective shares of foreign assets, foreign sales and foreign employment of TNCs.



Transnational corporations and economic restructuring

The analysis in the previous chapters of Part Two has dealt with individual components of the competitiveness of transnational corporations (TNCs) and their potential contributions to a country’s economic performance. It is, however, one ofthe characteristics offoreign direct investment (FDI) that it is a package of assets which can, in interaction with domestic factors, produce performance-enhancing effects that extend beyond the sum of its parts. In particular, FDI can enhance a country’s ability to restructure its economy in a manner leading to higher productivity and income. This chapter examines how TNCs — in the process of improving their own competitiveness — can contribute to industrial restructuring in home and host countries and reviews some country experiences in this respect. This examination is preceded by a short introductory section outlining the link between industrial restructuring, economic performance and TNCs.


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