ABSTRACT
A considerable proportion of the flows of goods and factors between countries takes place within multinational enterprises (MNEs).1 As an operative definition we associate this with firms which own and control income generating assets in more than one country (cf. Buckley and Casson 1985). A subsidiary owned and controlled abroad is established through direct investment. According to conventional theory, discussed in Chapter 2, direct investment is motivated by specific advantages associated with ownership, combined with advantages in internalization and inter-country differences in factor costs and technology (Dunning 1977).
