The Multinationalization of the Transport Sector

According to the World Investment Report 2004, the structure of Fm has shifted towards services. Further, the composition of services FDI is also changing from trade and finance to such industries as electricity, water , telecommunications, storage and transportation. In the latter sector the value of FDI stock rose 16-fold between 1990 and 2002. Incorporating a transport sector dominated by multinationals and economies of scale in a modelof the new trade theory leads to different predictions regarding the volume of trade and income as compared to a model with iceberg transport costs. It also opens up a further possibility for specialization.