ABSTRACT
This chapter begins with a brief survey of the principal trends in global foreign direct investment in manufacturing since the mid-1960s. It explores the implications of internationalization for the United Kingdom (UK) economy. The distinctive feature of the current phase of internationalization is the large scale global expansion of all three circuits of capital and also the growing international integration of production. The forms and the reasons for the internationalization of production are numerous and vary in time between economies, industries and firms. The internationalization of production especially as a replacement for exports has been influenced by the growth of protectionism against the import of finished goods, and by the liberalization of government controls on capital flows during the 1970s. The chapter concludes with a critical comment on views which explain the crisis in manufacturing in the UK in terms of the UK's inability to compete internationally – notably because of rising labour costs and declining productivity.
