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ies remains considerably lower than those in Mexico and the European border (Athukorala and Menon 2010). Possibly more essentially, significant wage differences between economies in East Asia rose cross-border trade in components. -Second, the relative factor cost benefit of these economies has been added by more constructive trade and investment policies. (Carruthers et al., 2003).

Third, as the early-birds of global specialization, Southeast Asia (in particular Malaysia, Singapore, and Thailand) seems to suggest great agglomeration advantages for companies previously located there. Choosing the site for MNE assembly operations are powerfully influenced by the existence of other key market players in a given country or its neighbours. (Borrus et al., 2000; McKendrick et al.; 2000). In sum, the Asian skill substantiates the view that, the longer they stay, MNE affiliates tend to become ever more ingrained in their host countries mainly as longer-term reforms better the overall investment climate (Rangan and Lawrence, 1999).

Finally, China’s appearance as the first low-cost assembly hub for a broad ranges of electrical and electronics products have boosted component manufacture and assembly in other economies in the region. Here, China’s role is mainly important due to its neighbourhood advantage its huge supply of labour readily brought into production activities and its aptitude to meet altering international demand without causing large factor price turbulence (Jones 2000).

In 1996–97, the IMF targeted Ethiopia of all poor countries, of no interest to international investors and twisted the government’s arm to make it open its capital account and to establish a Treasury bill market, partly to signal to the rest of sub-Saharan Africa that everyone should move towards financial liberalization (Wade,2001).

The scoring criterion for the economic scope reflects the Washington Consensus. For example, a country could obtain the top score on its trade system only if it had a practically free trade regime with maximum tariff under 15%, a low average tariff, and no export subsidies or taxes.

TRENDS

This section discusses the fluctuation of the global volume of FDI, in spite of a secular upward trend. For instance, it rose from 0.93% of world GDP in 1990 to approximately 4.79% in 2000. However, in 2003, it was down to 1.57% of world GDP, less than its 1997 level, as Mody (2004) reports. From a global perspective, the world level of exposure to political risk would also fluctuate with the global volume of FDI. It would thus respectively increase or decrease if investors become more or less selective when choosing the location of their investments, with implications for the regulation of international investments. (Meon, 2012)

FDI is also concentrated amongst developing countries and regions. The top eight

Developing economies have been responsible for three quarters of inward FDI flows

Since the 1980s: China, Hong Kong (China), Mexico, Brazil, Singapore, Russian

Federation, Chile and India. The top 25 developing countries receive 95% of inward

FDI.

There are wide differences across regions. Chart 1 show that the absolute values of

FDI are highest for Asian developing countries, followed by Latin American and

Caribbean countries, while Afric