corporation capital is that it contribute to economic growth. Even more, transnational capital is an engine of growth.World Investment Report 1993, UN, 1993, concludes:"The growth of FDI outflows is closely correlated with the growth of output. In short, and not surprisingly, the decision by TNCs to invest abroad is affected by cyclical fluctuations in economic growth (business cycles), both at home and abroad. The impact of business cycles on global FDI flows operates through the interactions between home and host-country economic conditions. This is partly owing to the fact that,as regards the supply-side of FDI, the foreign investment decisions of TNCs are affected by the availability of investible funds from corporate profits or loans, which are themselves affected by conditions at home. However, demand-side factors also play their part: growing markets abroad can give TNCs an impetus to invest, especially if domestic conditions are deteriorating. Indeed, growing foreign markets may be particularly attractive for TNCs based in countries experiencing a cyclical downturn. In 1991, these factors helped to raise the share of developing countries in total inflows; it rose to 25 per cent from an average of 17 per cent during 1985-1990". (We know, from Table 1 that that share rose even more in the period 1990-1995 to 30%).The most important finding of this United Nations' study is that FDI 'follow economic growth in the host country' and there are no indicators signalling that FDI 'fosters economic growth'The study adds: "the growth of the world economy after the recession of the early 1980s appears to have stimulated FDI flows WITH A TIME-LAG OF ABOUT TWO YEARS. Similarly, the downturn beginning in 1989-1990 led to a decline in world-wide FDI flows starting in 1991. Business cycles may also induce growth rates of different countries to diverge more by affecting some countries more severely than others. The cyclical downturn that began in ...
