INTERNATIONAL PRODUCTION NETWORKS AND FOREIGN INVESTMENTS: INTERDEPENDENCE IN 21 st CENTURY

Abstract

The article presents the results of research on the interdependence of international
production networks and foreign investments in the twenty-first century. It is determined
that the formation of international production networks takes place between countries
that are open for trade and investment, as the transfer of production segments first takes
the form of investments, and later, of international trade. The dynamics of Greenfield
investments are considered, and key trends are determined: their total volume has
increased in recent years, and the relationship between the corresponding shares of
production and service sectors changes in favor of the latter. It is substantiated that this
is the result of the accelerating spread of technologies embedded in the field of goods and capital, especially in the areas where they are most important for international
competitiveness. In the course of the study, it was determined that the interdependence
of foreign investment and international production networks creates a new reality of
international trade, in which they sometimes collide and affect each other. It is
substantiated that the proliferation of international production networks in the service
sector makes relevant a corresponding reorganization of international cooperation on
trade policy issues.