chapter  1
Introduction
ByGANESHAN WIGNARAJA
Pages 12

Developing countries today face a new manufacturing context. Progressive globalisation, widely acknowledged to be the defining feature of the late twentieth century world economy, seems set to continue into the early twenty-first century.1 The process of world economic integration has involved a broadening and deepening of the inter-relationships between international trade and foreign direct investment (FDI) flows. World trade growth consistently outpaced world GDP growth during the last two decades and world foreign investment growth far exceeded both of them. Accordingly, international trade and foreign investment flows reached historically unprecedented levels in the late 1990s. The onset of a global recession in 2001-2002 is likely to bring a temporary slowdown in these flows but the integration of the world economy will carry on, albeit at a reduced pace during this period. The outcome is the creation of an international market place for goods and services that seems indifferent to national borders and state regulation. A combination of factors – falling trade barriers (through the implementation of the Uruguay Round Agreements and economic liberalisation), increasing technological progress (especially the information communication and telecommunications (ICT) revolution), declining communications and transport costs and highly mobile multinational enterprises seeking out new investments – have driven world economic integration. This complex process is irreversible and has revolutionary implications for industrial development.