FDI flows in manufacturing are dominated by mergers and acquisitions . . . rather than by the creation of new capacity: and a big share of FDI is in non-productive, speculative and financial ventures.26
Most multinationals concentrated their investments in a particular advanced industrial country and its neighbours, and then relied on the sheer scale of investment, research and development, and production there to provide an advantage over all competitors. The foreign investment that did take place was not necessarily "global" in its character. "Sixty-six percent of the output of US foreign afiliates" was "sold locally", that is, within the boundaries of the particular country in which a particular afiliate was based.27
This was a trend which broke with the predominantly national basis of production without, however, turning into the global production stereotype. A multinational could seek to overcome obstacles to exporting to a particular country by establishing plants inside its borders-in a pattern which Ruigrok and van Tulder called glocalisation.28 Even if it started off with "screwdriver plants" devoted simply to assembling components imported from the multinational's home country, it often ended up turning to local firms to provide components. The multinational gained because local firms effectively became its satellites, supplying it with resources and fighting for its interests against its local or regional competitors. It might even welcome protectionist measures by the state its subsidiary was in, since that would protect its sales there from international competitors.
Globalisation theorists failed to recognise such developments. Yet they often tried to bolster their own case by referring to investments like those of Japanese motor companies in the US and Britain which were precisely along these lines. Similarly, they stressed the "flexible production" characteristic, for instance, of part of the Italian knitwear industry, and "just in time" production methods pioneered in Japan as typical of globalisation, although, as Michael Mann quite correctly noted, both implied localised or regional, rather than global, production.29
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