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By Christopher J. S. Gentle (auth.)

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The branching of sophisticated telecoms networks is rapidly changing this situation. Since many service activities can be dealt with over the wire-whether it's a video-conference with a management consultant or a hotel reservation centre - this has allowed services to be detached from the local market. The use of toll-free numbers, private corporate networks or the worldwide web of the Internet will continue to foster this trend. These developments need to be viewed in the context of the increasing inter-dependence and inter-linkages between goods and services.

Between 1988 and 1992, it is estimated that some $25 billion were invested in China. Second, the growing integration of the world economy has meant that the differentials between economies have become increasingly magnified and exploited. Perhaps the most visible representation of this trend has been the difference in wage levels between the developed and developing economies. The gap that exists between the highest wage locations and those at the bottom of the league are great indeed. Factory wages in 1993 range from $25 per hour in western Germany to below a dollar in China - Germany is still, however, the world's largest exporter of manufactured goods7 .

Far from it. There is a growing cohort of companies in a range of service industries that are now exploiting the differentials that exist around the world with increasingly sophisticated telecommunications networks. For instance, Bangalore, India (or Electronic City as it is known) has become a popular centre with TNCs, such as IBM, 30 After Liberalisation Hewlett Packard and Sanyo, for software production. The labour intensive process of machine code writing (the basis for software operating systems) takes place in vast software factories staffed by well-educated, but low paid (by western standards) Indians.

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