initial production, with developing countries playing a minor role unless they offer significant internal market potential. 26. Technological developments also stimulate the very rapid transnational corporation growth occurring in service sectors, Many services are not tradeable in the traditional sense, and both customer demands and the regulated nature of many service industries require a direct investment presence if a foreign enterprise is to participate in a country's domestic service economy. While service enterprises are expanding rapidly, particularly in the financial, trade and information-processing areas, those service activities are being conducted also by industrial transnational corporations which choose to internalize these functions. Overall, services now account for over one half of the annual flow of foreign direct investment and roughly 40 per cent of the stock (of which nearly l1alf is represented by service activities carried out by industrial enterprise s). J..~I This growth in services ties together a wider range of business activit ies, broadening the integrative effect of transnational corporations while also deepening the penetration of international economic forces into national economies. I • • • (b) The growth of non-equity investments E/C.10/1990/5 English Page 11 27. One of the elements most commonly associated i.n the past with the concept of foreign investment was the equity stake taken by a foreign investor in a local business enterprise . Equity position has been asswned to reflect the level of foreign control over operational decisions and the distribution of resulting business profits. Hence, equity issues are central to the historjcal struggle by developing countries to increase their participation in local transnational corporation operations as well as to transnational corporation concerns over risk assessment and expropriation/compensation standards that help safeguard or assure recovery of their initial capital investment. 28. The series of reports from the United Nations Centre, Transna~.iQ.ru!J. 
**Analysis**
The text discusses the growth of transnational corporations and foreign direct investment, specifically focusing on the service sector and non-equity investments. It highlights the increasing importance of services in foreign direct investment and the expansion of transnational corporations into new areas. The text also touches on the historical struggle of developing countries to increase their participation in transnational corporation operations and the concerns of transnational corporations over risk assessment and expropriation/compensation standards.

**Category**
International trade, Industry