Introduction

There are two reasons for this volume and for the workshop it is based upon: (1) the rapid increase in the globalization of business has led to a large proportion of economies being controlled from abroad, and (2) this process is not evenly spread over all countries. Both aspects are of interest for economic policy in (potential) host countries since the appearance of foreign investors and the change of ownership of productive assets may have implications for income and employment in the economies concerned. Implications could result from various mechanisms, such as the direct transfer of income and jobs across borders and the rather indirect effects of knowledge transfer and strategic changes imposed on the foreign affiliates. Foreign-owned firms (FOFs) could behave differently, undertake activities that would not have been undertaken by indigenous firms or phase out the activities of formerly indigenous firms. It has been shown that the most important implications of internationalization can be assumed to come about via transfer of ownership rather than via the transfer of capital (Lipsey, 2000). Therefore, the question of whether, and in what respect, FOFs are different from indigenous firms deserves the attention of economic research. Its relevance depends, among other factors, on the volume of inward foreign direct investment (FDI).