Foreign Direct Investment Outlook

Here is a useful outlook for foreign direct investment (FDI).

Overall foreign direct investment (FDI) had remained flat in the past two years but was expected to pick up again next year, boosted by an improving global economy, according to the UN. Global FDI totalled $653 billion last year and $651 billion for 2002. The figures represented a sharp drop from $1.4 trillion in 2000 and $824 billion in 2001.

The UN Conference on Trade and Development, which monitors FDI around the world, said the decline was caused by the continuing low value of projects and fewer cross-border mergers and acquisitions. These are considered to have been the key driver in global FDI since the 1980s. Developed countries - the US in particular - were the largest recipients of FDI in 2003, with $467 billion of the total of $653 billion. Flows to the European Union, notably to France and Germany, declined last year.

The UN said FDI outlooks for 2004 were promising because of the expected strength of the global economic recovery. The UN said the rebound was because of investment projects in natural resources and the environment. FDI flows to the Asia-Pacific region increased marginally, from $95 billion in 2002 to $99 billion in 2003. China received $57 billion last year, followed by South Korea, Thailand, Vietnam and oil-rich Azerbaijan. Latin American and the Caribbean countries were negatively affected. FDI declined in those countries from $56 billion in 2002 to $42 billion in 2003. FDI in Argentina, Brazil and Mexico experienced a significant decline. Investment in central and eastern Europe was little changed. The region received $29 billion in 2002 and $30 billion last year.

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