... process or on countries endowments of natural and other production resources. Manufacturing companies are usually the first targets of privatisation. Consequently, the manufacturing sector would account for the highest share in FDI during the early stages of a country's development. The privatisation of services usually comes at a later stage, with the sale of state owned companies in telecommunication, financial services and retail trade. In the 1970s, most FDI was concentrated in natural resources and manufacturing. However, since then, predictably, the services share of total FDI inflow has increased for most OECD2 countries. This shift has been particularly pronounced from the mid 1980s onwards. The service sector now accounts for about half and perhaps close to two-thirds of FDI flows. Most services have to be consumed at the place of production. This make exports an unlikely channel to access foreign markets. This means that firms need to establish themselves in ...

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