Introduction

Abstract

The globalization of the economy is one major challenge at the end of the 20^th century. While it is true that free trade and high capital flows a century ago already brought about a high level of international economic dependency, the high growth rate of foreign direct investment and the global internet have established a new type of interdependency among OECD countries and many newly industrializing countries. Diffusion of technological progress will gain importance as the telecommunication networks and the internet, respectively, provide new opportunities for spatial diffusion of knowledge.