INTRODUCTION

One of the most notable trends in the world economy over the past decade has been its increasing global economic integration. The world economy has witnessed a growing internationalization reflected in terms of the rising share of international trade and foreign direct investment (FDI) flows. The average annual growth rate of world merchandise trade has been twice as much as that of world output during the second half of the 1980s, and over three times during the first half of the 1990s. FDI inflows have expanded at an annual rate of 24 per cent during the second half of the 1980s and at 17 per cent during the 1991-6 period to touch a peak of $349 billion in 1996. Another development has been in the expansion of the world trade in commercial services which has grown at an average annual rate of 22 per cent during the second half of the 1980s. Financial services have been liberalized on a large scale since the late 1980s following the deregulation of financial markets worldwide and the evolution of new information technologies. A number of business services such as banking, insurance, advertising, accounting, communications, media, car rental and catering services have also become increasingly internationalized over the past decade. The internationalization of these services, especially media, advertising and communication services, is highly visible. It affects consumption and demand patterns across the world and gives a greater visibility and edge to multinational enterprises. A cumulative effect of these trends has been to make the world economy far more integrated economically in the 1990s than ever before.