ABSTRACT
One of the hallmarks of the decade beginning in 1985 is the significant increase in the international flow of long-term private capital, particularly of foreign direct investments (FDI). Feenstra (1998) documents the surge of investment into developed countries in the second half of the 1980s, followed, since 1990, by a rapid increase of investments into developing countries, especially China. More than one-third of the total inward flow of FDI has ended up in developing countries in recent years.
