This annual report examines the major sectoral and geographical changes in the pattern of foreign direct investment (FDI) flows, particularly with regards to developing countries. After three years of decline in global investment flows, there are signs of revival in FDI, particularly in the services sector which makes up the largest economic sector in many countries. The 2004 edition looks at the shift towards services and examines the development challenges and opportunities likely to arise. The report is divided into three parts and considers a variety of issues including: regional FDI trends in Central and Eastern Europe, developing and developed countries; changing patterns of FDI in services, key players and driving forces, and the impact on host countries; the offshoring of corporate service functions; national and international policy challenges both for host and home countries.