Abstract

At the international level, liberalization requires further mobility of technology
and labour than is currently available across countries. Apart from the international movements
of factors of production, this paper argues that the culture of liberalization needs to
be complemented by a competition culture able to tackle both the firm and the consumer
view. We start with definitions of Foreign Direct Investment (FDI) and contestability. Constraints
on FDI and competition policy are then examined. We stress that, to optimize the
benefits of FDI, critical variables should be taken into account. Finally, we conclude by stating
that there is no either/or between markets and State intervention.

JEL Classification: F21; F68.