Figure 1.3 illustrates two other im

Figure 1.3 illustrates two other important trends—the sustained growth in cross-border flows of
foreign direct investment that occurred during the 1990s and the importance of developing nations as the
destination of foreign direct investment. Throughout the 1990s, the amount of investment directed at both
developed and developing nations increased dramatically, a trend that reflects the increasing
internationalization of business corporations. A surge in foreign direct investment from 1998 to 2000 was
followed by a slump from 2001 to 2003 associated with a slowdown in global economic activity after the
collapse of the financial bubble of the late 1990s and 2000. However, the growth of foreign direct
investment resumed in 2004 and continued through 2007, when it hit record levels, only to slow down
again in 2008 as the global financial crisis took hold. Among developing nations, the largest recipient of
foreign direct investment has been China, which from 2004 to 2008 received $60 to $90 billion a year in
inflows. As we shall see later in this book, the sustained flow of foreign investment into developing
nations is an important stimulus for economic growth in those countries, which bodes well for the future
of countries such as China, Mexico, and Brazil, all leading beneficiaries of this trend.