ABSTRACT
The chapter tends to be economical with analysis, explanation and examples and provides a number of statements which readers are expected to accept at face value. For instance, we are told that the EU provides a good illustration of how divided countries are on their attitudes to FDI, without providing any evidence to back up this assertion. On the contrary, the EU members are not equivocal on direct investment. The Treaty of Rome regulates for freedom of capital and subsequent directives have provided practical substance to this principle, so that today complete liberalization of capital flows of any kind has been achieved among the fifteen EU member states. This is to be expected, since one of the characteristics of common markets and economic unions is the explicit encouragement of capital flows, providing one of the dynamic economic benefits to the participants. Member states of the EU are free to control or liberalize both inward and outward direct investment from third countries, and such investment flows have, in general, been encouraged by all concerned (Burgenmeier and Mucchielli 1991).
