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Non-FDI modes of international production

The third pillar

Cross-border non-equity modes (NEMs) of international production generated at least $2 trillion in sales globally in 2010 and are growing rapidly, shaping world trade and investment patterns, with important implications for development. The recent World Investment Report (WIR 2011) is focussing on “Non-equity modes of international production and development” (see reference). Rainer Falk reports

 

International production is not exclusively about foreign direct investment (FDI) on the one hand and trade on the other. There is a third pillar of international production: NEMs - which include contract manufacturing, services outsourcing, contract farming, franchising, licensing, and management contracts - allow transnational corporations to coordinate activities in their global value chains and influence the management of host-country firms without owning equity stakes in those firms ...


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