The Industrial shocks of globalization

For the FMI: the growth of global activity over the course of the last five years is esssentialy the fact
emerging countries and developing countries. Chiana would represent around one quarter of global
growth, Brasil, China, India, and Russia around halve, and the entriery of the emerging countries and
the developing countries around 2/3s, compared to around in the 70's. PriceWaterhouseCoopers
estimates that in 2005 China will be the primary world power, followed by the United States and India.
In developed nations, industry seems to be still at the center of the tourment of globalization,
grand multinational enterprises, delocalization, fusions-acquisitions, call centers or laboratories
localised in India or elsewhere, disindustrialization etc are, among otheres, realties associated with the
difficukties of the industrial mutations in the 21st century, with the primordial question: What is the
industrial future for developed countries?
Foreign investments have been globaly associated with the the disindustrialization of developed
countries but also sectorial to the unemployment in the national industries which are strongly competed
with by the theimportations of the new emerging countries. Moreover, while numerous countries seek
to attract the most foreign investment possible, one would see then that the foreign investors also do
actions that include fusions and hostile buyback/rachat and that a part of the industry that is called
national passes under foreign control, from which come the return to protectionist policies vis-a-vis the
IDEs and temptations of withdrawal: the IDEs abroad risk provoking unemployment in the country of
origin and the IDEs coming from the abroard risk looking the national character of local enterprises.
International direct investments and multinational firms
For many, glovalization is prmarily the arrival of the great multi-national firmsglobal
enterprises who direct a world-wide network of filiates and subsidiaries (sous-traitants) and sell around
athe world, at the same moment, the same product: to the globalization of the possibilities of
production would be linked globalization of the market. But the notion of a village plent is in fact far
from being a reality, tdistance remain still important as all other market segmentations. Despir
everything, the progressive openings of states to commerce and to international investments have
permitted important development (celui-ci). During the entierty of the period of the 90's and 00's, the
states applied generally policies that were favroable to direct foreign investment. (IDEs)
A. Globalization and IDE's
An important growth of IDE's.
IDE's are are defined as an investment that involves a long-term relationship reflecting a
coontrole of an enterprise residing in a country of orign on another enterprise situated in a country of
welcome; the inferior limit of this taking of control is fixed at 10% in order to distinguish the
mouvements of portfolio capital from those of driect investments.
In the course of the 90's, the IDE's grew very rapidly, marking thus without doubt a new phase
of globalization. Two peeks are observable: one around the year 2000 and the other in the years 20062007. In 2006, the entering investment flows, at the global level, arose to 1.306 tillion dollars. This
amount is close to that of the record of 1.411 trillon dollars attained in 2000. In 1990, the amount was
only 55 bilion dollars.
GRAPHIC 3.3
The two highest levels correspond to the waves of international fusion acqquions which have

engendered an acceleration of IDE's. Moreover, give the fact enterprises profits have been high, the
benefits reinvested on location have become an important component of the entering flows of IDE's:
according to the data of the CNUCED, they represented in 2006, 30% of the total of global entering
IDE's and 50% in the sole countries in development. (dans les seuls pays en developpement)
International Fusions-acquisition and Service IDE's
In the majority of the developed countries, the fusions-acquisitions (F&A) count for more than half of
the IDEs. Among the 10 largest F&As in the 00's, one can notice the wave of F&A in the enterprises of
TIC (technology/communciations) (the dot-com boom) and between 2004 and 2006 a second wave
in the banking and telecommunicatons sector.
Graphic 3.2 Trans-border fusions-acquisitions
For the IDEs and in sectorial terms, it is notwether to oberserve the growing ampleur taking for over 20
years by the service sector, and by consequence, the lowering of the manufacturing and primary
sectors. The stock of the IDEs in the primary sector represent henceforth only 10% of the the entrierty
of the IDEs and the manufacturing indurstry represents no more than 30%, compared with 41% in
1990. The service sector thus attains more than 60% of the global IDEs versus 49% in 1990. Similarily,
more than 50% of the Ides in the developing countries occur in the service sector.
IDES and other large international variables
In current dollars, the amounts of the flows of IDE's have been largely demultiplies. Although between
1990 and 2006, the global PIB has been multipled by 2.2 and the expeortations by 3.2, the IDE flows
have been multipled by 6.4.
TABLEAU 3.1 Indicators of the IDEs 1982-2006
Thse strong evolutions of recent years makes a ratio appear of IDE flows on investment interiort to the
country (raw formation of fixed capital) which has passed from 2% in the 70's to 14% in the 2000's,
marking thus the growing openness linked to globalization.
Geographic Distribution of the IDEs
In terms of stocks of foreign investmens, the United States are the pirmary investing country, but also
the primary land of welcome for IDEs. However, their part in the mounting totla of the stock of IDEs
abroad falls continuously. From 37.7 % in 1980, it was no more than 19% in 2005. The UK, Germany,
and France remain in the lead group. The concentration of investing countries, although diminishing,
remains strong: in 1980, the 15 primary investors held 96% of the total stocks of IDEs, in 2005, they
had 86%.
Tableau 3.2Primary countries of origin of IDE's stocks world-wide 1980 to 2005.
In terms of flows, the long term tendancy of entering flows of IDE's indicates that the part of belonging
to developing countries is growing. If one observes an annual average over three years of the entering
IDE's, between the period 70-72 and 2004-2006, the strong evolutions reside in the lowering of the
influce of the developed countries in entering IDE's66% instead of 78%-- and a much larger place

for Chaina and emerging Asis which have both represented more than 12% of the entering IDE flows
instead of less than 4.5%. At the center of Europe, the new member states (NEM10) have obtained a a
percantage of 3.6% while the represented nothing in 1970.
TABLE 3.3- Entering IDE flows 1970-72 and 2004-2006 (in %)
Among the countries which have the most cumulative IDE flows over 10 years, France appears as the
one which has a net sale of exiting IDE's that is the most elevate, it is ofllowed by the UK and Japan.
Conversely, china has the most elevated level of net sales of entering investments, followed by, to a
lesser exten, the US and Mexico. Other large countries, like Germany, have on the other hand entering
flows and exiting flows that are of a comparable size and thus a net sale that is barely elevated.