As you have learned from this Issue in Depth, there are many relationships between international trade and investment. Roughly one-third of the world’s volume of trade occurs within the same company’s affiliates across borders. Furthermore, a higher percentage of the goods and servicesA good is a tangible item that someone has made, mined, or grown. A service is a form of work, assistance, or advice that provides something of value to someone else but does not produce a tangible item. produced by facilities financed in part by foreign direct investmentThis category refers to international investment in which the investor obtains a lasting interest in an enterprise in another country. Most concretely, it may take the form of buying or constructing a factory in a foreign country or adding improvements to such a facility, in the form of property, plants or equipment. tend to be exported than by other domestic firms.

In this way, foreign investment can be seen as both a complement and a substitute for trade. A company that wishes to sell its goods and servicesA good is a tangible item that someone has made, mined, or grown. A service is a form of work, assistance, or advice that provides something of value to someone else but does not produce a tangible item. in a foreign market may often ask whether its goals are best achieved by manufacturing in its home country and exporting its products, or by relocating production to the foreign market. A company’s decision on which method to pursue in reaching foreign markets, via trade or investment, may well be determined by the comparison of trade barriers with the investment environment.

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