The World Investment Report 2001 examines the issue of linkages between foreign affiliates of multinational enterprises and local companies in developing countries. Worldwide FDI flows again reached record levels in 2000. FDI remains the main driver of the expansion of the international production system. Forging linkages between foreign affiliates and domestic firms is a main challenge for policy-makers in developing countries in order to benefit from FDI as much as possible. WIR 2001 pays particular attention to this challenge. The objective is not to raise linkages at any cost, but to use them to upgrade the competitive capabilities of domestic enterprises. Fostering linkages is an important means of diffusing knowledge, information and skills from a foreign investor. In a technology and skill driven world, this can contribute to increasing the efficiency and growth potential of the host economy. WIR 2001 provides valuable information on country and company experience in this field.