business in the twenty-first century. They can either play a positive role, through active leadership and collaboration, or a negative role, through failure to undertake this responsibility. It is useful to remember here that a significant degree of global economic integration was achieved in the pre World War I period. However, this progress proved fragile owing to the weakness of international institutions and individual country policies, and economic integration fell by the wayside during the next several decades of war and economic upheaval. Today's mainly positive environment for global business should not be taken for granted, particularly by the United States and Japan—the two countries with perhaps the greatest stake in maintainingand improving this environment.


1 The 1993 gross domestic product (GDP) of the United States was $6.4 trillion, whereas Japan's GDP totaled $4.2 trillion. See Keizai Koho Center. 1994. Japan 1995: An International Comparison.Tokyo: Keizai Koho Center, p. 11. The U.S. outward stock of FDI was $539 billion in 1993, versus $264 billion for Japan. The United Kingdom, with a $247 billion outward FDI stock in 1993, was in third place. See United Nations Conference on Trade and Development. 1994. World Investment Report 1994.New York and Geneva: United Nations, p. 19.

2 Mechanisms for FDI include acquisition of existing businesses, minority stakes in existing businesses, “green field” establishment of new operations (including new joint ventures), and investments to expand existing operations. For overviews of FDI in the United States, see Graham, Edward and Paul Krugman. 1991. Foreign Direct Investment in the United States (second edition).Washington, D.C.: Institute for International Economics, and U.S. Department of Commerce. 1991. Foreign Direct Investment in the United States: Review and Analysis of Current Developments. Washington, D.C.: U.S. Government Printing Office.

3 Encarnation, Dennis J. 1992. Rivals Beyond Trade: America Versus Japan in Global Competition. Ithaca, N.Y.: Cornell University Press, p. 1.

4 United Nations, 1994, p. xix.

5 The Investment Experts Group of APEC developed a set of nonbinding investment principles that were endorsed at the Jakarta APEC Ministerial Meeting in 1994.

6 The OECD has established voluntary rules governing the practices of MNCs and government policies toward FDI. See OECD. 1992. The OECD Declaration and Decisions on International Investment and Multinational Enterprises: 1991 Review.Paris: OECD. In May 1995 the OECD Council committed the organization to developing a Multilateral Agreement on Investment (MAI) by 1997.

7 Humes, Samuel. 1993. Managing the Multinational: Confronting the Global-Local Dilemma. New York: Prentice-Hall, p. 24.

8 Bergsten, C. Fred, as quoted in Arrison, Thomas and Martha Caldwell Harris. 1992. Overview. p. 2 in Thomas Arrison, C. Fred Bergsten, Edward M. Graham, and Martha Caldwell Harris, eds. Japan's Growing Technological Capability: Implications for the U.S. Economy. Washington, D.C.: National Academy Press.

9 See Sakakibara, Eisuke. 1993. Beyond Capitalism: The Japanese Model of Market Economics. Lanham, Md.: The University Press of America and the Economic Strategy Institute.

10 United Nations, 1994, p. 72.

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