Service Sector Multinationals and Developing Countries

This chapter examines some of the principal issues in the relationships between multinational enterprises (MNEs), the service sector and developing countries. The linkages are both complex and important. There is sizeable investment by developed country MNEs in the service industries of developing countries. Increasingly, developing country-based MNEs are operating in the service sectors of the developing and more advanced economies. The importance of this investment results from the growing significance of the service sector in the world economy, its considerable fluidity and the role that services play in the development process (UNCTAD 1985). MNEs enter the picture as major suppliers of services in the developed nations and, because of the particular economic characteristics of services (Enderwick, 1988a), as a principal mode for transfer of service technologies and output to the developing nations.