By 1990 the total number of transnational corporations exceeded 35,000, with more than 150,000 foreign affiliates. This growth in numbers has accompanied a massive outpouring of foreign direct investment during the second half of the 1980s. The total stock of foreign direct investment world-wide now stands at some $1.7 trillion, with annual flows in 1990 amounting to $225 billion. The global sales of foreign affiliates of transnational corporations are estimated to be some $4.4 trillion, far greater than world exports estimated at $2.5 trillion, excluding intra-firm trade within transnational corporations. Sales by the affiliates of transnational corporations have thus emerged as a far more important mode of serving world markets than trade.

Developed countries continued to attract more than four fifths of world-wide foreign direct investment inflows in 1990. The Triad, consisting of the European Community, Japan and the United States, accounted for 70 per cent of world-wide inflows.

With the greater integration of non-European Community Western European countries, the European Economic Area (EEA) comprising countries belonging to the Economic Community and the European Free Trade Association, is emerging as a powerful economic region. In the 1990s the emerging triad may be more aptly described as including Japan, Nordi America (Canada and the United States) and the EEA. Cross-holdings of stocks of foreign direct investment within this emerging Triad amounted to $572 billion in 1989 (figure 2).

The absolute volume of foreign direct investment flows to developing countries has continued to increase, reaching a total of $32 billion in 1990. But their share in world flows has maintained a downward trend, declining from 25 per cent in the first half of the 1980s to 17 per cent in the second half.

Despite a declining share, the rate of growth of foreign direct investment flows to developing countries was more than twice the rate of growth of domestic output, investment and technology imports of these countries and one-and-a-half times the rate of growth of their total imports.

The Report provides an extensive review of recent policy development at the multilateral, regional, bilateral and national levels and examines their implications for foreign direct investment.

• At the multilateral level, the most significant developments regarding foreign direct investment took place in the context of the Uruguay Round. Alter almost five years of negotiations, the Director-General of GATT submitted a draft final Act embodying the results of negotiations including text on services, trade-related investment measures (TRIMs) and trade-related aspects of intellectual property rights (TRIPs) The Report provides the first analysis of the implications of these draft agreements for foreign direct investment.

The World Investment Report 1992 has as its principal theme the role of transnational corporations in the growth of developing countries. It argues that the increasing importance of transnational corporations in the growth process of developing countries arises not merely from the recent upsurge in the volume of foreign direct investment, but also from a number of major structural changes in the world economy which place transnational corporations in a central position as arbiters of the international division of labour.

Based on the analysis of rising importance of foreign direct investment, the fundamental structural changes in national economies and the international economic environnent which define the new context for growth and the actual and potential contributions of transnational corporations to growth in their quantitative as well as qualitative dimensions, the World Investment Report 1992 calls for several new policy approaches in both international and national domains.

The World Investment Report postulates that competition among nations will increasingly be based on domestic rather than military prowess. And the nature of international competition will be redefined by the globalization of economic activities of transnational corporations which car be increasingly viewed as networks of international production in which intra-firm flows of capital, goods, services, training and technology play an important role, and their major value adding function is the integration, organization and management of those international flows.