On the eve of the 21st century human society is facing historical changes. The information revolution is leading global trade and international investment towards great growth rates. "We are not beginning a new century, we are beginning a new era". These were the sayings of Shimon Peres, Israel's Foreign Minister that described the development of global information society which will create a new economic, political and social order. Foreign Direct Investment (FDI) is a major contributor to the development of a globalized economy. .
FDI is the financial investment that aims to get lasting management right in an economy outside the investor country. Different countries have different record rules. Nowadays the minimum limit of a 10% of the voting stock is becoming the most accepted. .
Firms that made direct investment possible are called Multinational Enterprises (MNEs). Those were firms, which began by taking value-added activities in the home market, and then established subsidiaries of those activities abroad. Foreign Direct Investment helped towards this way. The phenomenon of the MNEs flourished together with the growth of international business.
Sometimes, there is the impression that all multinationals are large corporations. It is easy to get this feeling since huge MNEs are promoted more. However, the top-100 multinationals own nearly $2 Trillion of assets outside their home countries, which represents a quarter of the world stock of all foreign direct investments . The old belief that prevailed for many years was that comparative advantage could be gained by achieving economies of scale. On the contrary, today size does not always matter. This is illustrated by the fact that even though big banking organizations have been merging across borders in order to achieve this goal, the growth rate was instead sluggish. In addition, Exon and Shell which are examples of traditional leaders in the oil and gas industry, now are threatened from smaller upstarts.
