Asking the question of whether Foreign Direct Investment (FDI) is 'integrating' the world economy, this comprehensive volume consists of an overview of current FDI research.While the term 'integrating' is often used, the real test should be whether FDI is instrumental in bringing per capita incomes across countries closer together. By this yardstick, the answer is no. The forces driving FDI are strong; they lead it to flow to countries with attractive investment conditions and, moreover, investors have a tendency to follow each other.It is in such settings that FDI appears to have the most beneficial effect in raising growth. At the same time, the surge of foreign investment flows in the 1990s did not raise investment rates in developing economies: in particular, the relationship between FDI and domestic investment fell sharply between the 1980s and the 1990s, explained possibly by the increasing portfolio nature of FDI.