CONTENT: PREFACE iii ACKNOWLEDGEMENTSiv ABBREVIATIONS ix KEY MESSAGE x OVERVIEW xii CHAPTER I. GLOBAL INVESTMENT TRENDS 1 A. GLOBAL TRENDS AND PROSPECTS: RECOVERY OVER THE HORIZON. 2 1. Overall trends 2 a. Current trends 3 b. FDI by sector and industry 8 c. FDI by modes of entry 10 d. FDI by components 11 e. FDI by special funds: private equity and sovereign wealth funds 13 2. Prospects 16 B. FOI AS EXTERNAL SOURCES OiF TO DEVELOPING COUNTRIES 21 C. FURTHER EXPANSION OF INTERNATIONAL PRODUCTION24 1. Accelerating internationalization of firms 24 2. State-owned TNCs 28 a. The universe of State-owned TNCs 28 b. Trends in State-owned TNCs' FDI.32 c. Issues related to corporate governance .34 CHAPTER II. REGIONAL INVESTMENT TRENDS 39 1. Africa40 b. Intraregional FDI for development. 42 2. South, East and South-East Asia45 a. Recent trends 45 b. Rising FDI from developing Asia: emerging diversified industrial patterns 47 3. West Asia 52 a. Recent trends 52 b. Outward FDI strategies of West Asian TNCs 53 4. Latin America and the Caribbean58 a. Recent trends .58 b. Developing country TNCs' inroads into Latin America 60 5. South-East Europe and the Commonwealth of Independent States 63 a. Recent trends . 63 b East-South interregional FDI: trends and prospects .65 6. Developed countries69 a. Recent trends 69 b. Bailing out of the banking industry and FDI .71 B. TRENDS IN STRUCTURALLY WEAK, VULNERABLE AND SMALL ECONOMIES. 74 1. Least developed countries 74 a. Recent trends . 74 b. Enhancing productive capacities through FDI76 2. Landlocked developing countries 79 a. Recent trends 79 b. Leveraging TNC participation in infrastructure development.82 3. Small island developing States 85 a. Recent trends. 85 b. Roles of TNCs in climate change adaptation87 CHAPTER III. RECENT POLICY DEVELOPMENTS 93 A. NATIONAL POLICY DEVELOPMENTS 94 1. Investment liberalization and promotion95 2. Investment regulations and restrictions 96 3. Economic stimulus packages and State aid 98 B. THE INTERNATIONAL INVESTMENT REGIME 100 1. Developments in 2010100 2. MA coverage of investment 102 C. OTHER INVESTMENT-RELATED POLICY DEVELOPMENTS 103 1. Investment in agriculture 103 2. G-20 Development Agenda. 104 D. INTERACTION BETWEEN FDI POLICY AND INDUSTRIAL POLICY 105 2. Interaction at the international level107 3. Challenges for policymakers109 a. Picking the winner 109 b. Nurturing the selected industries 109 c. Safeguarding policy space 110 d. Avoiding investment protectionism110 e. Improving international coordination 110 E. CORPORATE SOCIAL RESPONSIBILITY111 1. Taking stock of existing CSR standards 111 a. Intergovernmental organization standards . 111 b. Multi-stakeholder initiative standards .112 c. Industry association codes and individual company codes 112 2. Challenges with existing standards: key issues113 a. Gaps, overlaps and inconsistencies 113 b. Inclusiveness in standard-setting 114 c. Relationship between voluntary CSR standards and national legislation 114 d. Reporting and transparency 114 e. Compliance and market impact 114 f.Concerns about possible trade and investment barriers 115 3. Policy options117 a. Supporting CSR standards development. 117 b. Applying CSR to public procurement policy 117 c. Building capacity 117 d. Promoting CSR disclosure and responsible investment 118 e. Moving from soft law to hard law118 f. Strengthening compliance promotion mechanisms among intergovernmental organization standards118 g. Applying CSR to investment and trade promotion and enterprise development 119 h. Introducing CSR into the international investment regime 119 CHAPTER IV. NON-EQUITY MODES OF INTERNATIONAL PRODUCTION AND DEVELOPMENT 123 A. THE GROWING COMPLEXITY OF GLOBAL VALUE CHAINS AND TNC GOVERNANCE 124 1. TNC value chains and governance choices 124 2. Defining features of NEMs 127 B. THE SCALE AND SCOPE OF CROSS-BORDER NEMs 130 1. The overall size and growth of cross-border NEMs. 132 2. Trends and indicators by type of NEM 133 a. Contract manufacturing and services outsourcing .133 b. Franchising 138 c. Licensing 139 d. Other modalities 140 C. DRIVERS AND DETERMINANTS OF NEMs142 1. Driving forces behind the growing importance of NEMs 142 2. Factors that make countries attractive NEM locations 144 D. DEVELOPMENT IMPLICATIONS OF NEMs 147 1. Employment and working conditions. 147 2. Local value added 153 3. Export generation155 4. Technology and skills acquisition by NEMs 157 5. Social and environmental impacts160 6. Long-term industrial capacity-building.161 E. POLICIES RELATED TO WON-ESU1W OF INTERNATIONAL PRODUCTION. 165 1. Embedding NEM policies in development strategies 165 2. Domestic productive capacity-building 166 a. Entrepreneurship policy167 b. Education 167 c. Enhancing technological capacities. 167 d. Access to finance 168 3. Facilitation and promotion of NEMs 169 a. Setting up an enabling legal framework169 b. The role of investment promotion agencies . 169 c. Home-country policies170 d. International policies . 170 4. Addressing potential negative effects of NEMs 171 a. Strengthening the bargaining power of domestic firms 171 b. Addressing competition concerns. 172 c. Labour issues and environmental protection 173 REFERENCES 177 ANNEX TABLES 185 SELECTED UNCTAD PUBLICATIONS ON TWCS AND FDI 226