Prospects for FDI growth bright in emerging nations
Global economic slowdown will have an impact on foreign direct investment in many countries as it is expected to drop to $1.6 trillion from last year’s record level of US $1.8 trillion.
Sep 26, 2008
Global economic slowdown will have an impact on foreign direct investment in many countries as it is expected to drop to $1.6 trillion from last year’s record level of US $1.8 trillion.
This was revealed in the World Investment Report 2008 released the other day by United Nations Trade and Development Conference (UNCTAD). The financial crisis, which began to be felt in August 2007, had not at that time interrupted the four consecutive years of growth of FDI, which last year surpassed the previous record, set in 2000.
The rise in FDI was largely due to the relatively high rates of economic growth and strong performance by companies in many parts of the world. Also affecting investment to a certain extent was the depreciation of the dollar against other major currencies.
The respondent transnational companies (TNCs) who participated in the survey also seemed to be highly aware of the existence of ersistent geopolitical risks, as well as a possible further worsening of the world economic outlook. However, global investment prospects for the next three years remain positive in general, due to the underlying long-term trend of internationalization of businesses
Developing countries saw a 21% rise in FDI, to $500 billion, due to factors such as the increase in commodity prices and improved investment policies. Record FDI flows were experienced by the countries of the CIS (former Soviet republics), which received $74 billion; the least-developed countries, which took in $13 billion; and Africa, which attracted $53 billion
According to UNCTAD, 75% of the reforms introduced in foreign investment policies were favorable to investors. The rest, says the report, were adopted as part of more restrictive models applied mainly to extractive industries in Latin America, especially Bolivia and Venezuela.
The five countries considered most attractive by transnational corporations for future investments are China, India, the United States, Russia and Brazil. The interest in Russia and Brazil was already mentioned in last year's report, although it has grown significantly, UNCTAD noted. The next countries on the list are Vietnam, Germany, Indonesia, Australia, Canada, Mexico, Britain, Poland, South Africa, France and Turkey.
The rankings are unchanged from last year´s survey. However, the Russian Federation and Brazil have caught up noticeably in attractiveness. It is noteworthy that four of the five top destinations are the emerging economies known collectively as BRICs (Brazil, Russia, India, and China).
Prospects for the main developed countries appear somewhat less promising: international investors indicated a decline in their relative preference for these countries compared to the rest of the world. The EU-15 and North America will nevertheless remain among the preferred destinations of inward FDI flows in the coming years, due mainly to the size of their markets, availability of suppliers and skilled labour, and the good quality of their infrastructure.
Among the hot sectors for attracting FDI are :
This was revealed in the World Investment Report 2008 released the other day by United Nations Trade and Development Conference (UNCTAD). The financial crisis, which began to be felt in August 2007, had not at that time interrupted the four consecutive years of growth of FDI, which last year surpassed the previous record, set in 2000.
The rise in FDI was largely due to the relatively high rates of economic growth and strong performance by companies in many parts of the world. Also affecting investment to a certain extent was the depreciation of the dollar against other major currencies.
The respondent transnational companies (TNCs) who participated in the survey also seemed to be highly aware of the existence of ersistent geopolitical risks, as well as a possible further worsening of the world economic outlook. However, global investment prospects for the next three years remain positive in general, due to the underlying long-term trend of internationalization of businesses
Developing countries saw a 21% rise in FDI, to $500 billion, due to factors such as the increase in commodity prices and improved investment policies. Record FDI flows were experienced by the countries of the CIS (former Soviet republics), which received $74 billion; the least-developed countries, which took in $13 billion; and Africa, which attracted $53 billion
According to UNCTAD, 75% of the reforms introduced in foreign investment policies were favorable to investors. The rest, says the report, were adopted as part of more restrictive models applied mainly to extractive industries in Latin America, especially Bolivia and Venezuela.
The five countries considered most attractive by transnational corporations for future investments are China, India, the United States, Russia and Brazil. The interest in Russia and Brazil was already mentioned in last year's report, although it has grown significantly, UNCTAD noted. The next countries on the list are Vietnam, Germany, Indonesia, Australia, Canada, Mexico, Britain, Poland, South Africa, France and Turkey.
The rankings are unchanged from last year´s survey. However, the Russian Federation and Brazil have caught up noticeably in attractiveness. It is noteworthy that four of the five top destinations are the emerging economies known collectively as BRICs (Brazil, Russia, India, and China).
Prospects for the main developed countries appear somewhat less promising: international investors indicated a decline in their relative preference for these countries compared to the rest of the world. The EU-15 and North America will nevertheless remain among the preferred destinations of inward FDI flows in the coming years, due mainly to the size of their markets, availability of suppliers and skilled labour, and the good quality of their infrastructure.
Among the hot sectors for attracting FDI are :
- Life sciences: equipment and services for medical diagnosis (notably invitro), clinical tests, biotechnologies, bio-cosmetics, oncology and bioproduction.
- Agro-food industries: intermediate food products, special ingredients (colourings, emulsifiers, preservatives), processed seafood, aquaculture products and high-value-added products (e.g. pastries, pre-cooked food,health food).
- Transport equipment: automotive and aerospace electronics, hybrid motors, automotive logistics and innovative materials.
- Business services: customer service centres, logistics and business service outsourcers, regional headquarters, R&D centres, technical engineering and financial services.
- Personal services: retail, care of senior citizens, health care (e.g. medical care at home and remote diagnosis), financial services.
- Equipment and machines: robotics.
- Information and communication technologies: micro and nano electronics, software for video games, interactive and virtual image technologies, Internet technologies and embedded technologies for wireless telecommunication systems.
- Energy, chemistry and plastics, and environmental conservation: nano materials, improvements in existing materials, photovoltaic energy, wind power, water processing, recycling of wastes and non-food use of
agricultural products (e.g. bio-fuels, bio-polymers, bio-solvents, biomaterials). - Other industries: technical textiles (e.g. textiles with particular qualities in terms of robustness, suppleness, or adaptability).