Cities in a World Economy

International finance has surpassed international trade today. International finance: loans, equities, foreign currency transactions, occurs in cities which have grown in strength. More precise areas of international finance are financial markets, corporate service firms or even banks. In 1980 foreign direct investment grew three times faster than growth of export trade. Cities became centers of the business because they supported “highly advanced infrastructure… specialized services and top-level concentrations of telecommunications facilities.” “Growth of FDI has been embedded in the internationalization of production of goods and services… internationalization of production in manufacturing is particularly important in establishing FDI flows into developing countries.” 75 % of all FDI stocks were in developed nations. “The five major exporters of capital (United States, United Kingdom, Japan, France and Germany) accounted for 70% of total outflows.” “Levels of investment had grown sharply, reaching US$233.billion in developed countries and US$148.9 in developing countries.” Overall flows to developing countries decreased by 9% while flows to developed nation increased. The majority of the flows to developed nations were directed to East, South and Southeast Asia instead of Latin America, where it had been before. “The single largest recipient of FDI in services in the 1980s… was the European Community.” TNCs replaced banks as sources of financial flow to developing nations. Markets organized “institutional frameworks that organized … massive financial flows”. NAFTA and EEC are examples of transitional trade blocs. “WTO was set up to oversee cross-border trade.