Developing states getting more investment

MANAMA – Developing countries are attracting more foreign investment than ever before and are also increasingly investing abroad, the UN’s trade and development body said on Monday.

The United Nations Conference on Trade and Development (UNCTAD) said global flows of foreign direct investment (FDI) surged 29 per cent in 2005 from a year earlier to US$916 billion, with FDI in some developing regions at record highs. “We are witnessing today a profound shift in the world economy, with some developing countries gaining economic and political weight,” UNCTAD Secretary-General Supachai Panitchpakdi said in a statement.The United Nations classifies FDI as the ownership of at least 10 per cent of a firm by a foreign company.Both inward and outward FDI are generally seen by economists as signs of a healthy economy.Among developing nations, West Asia had the highest growth rate of inward FDI, 85 per cent up at a record US$34 billion in 2005 from a year earlier, followed by Africa with a 78 per cent increase to US$31 billion.UNCTAD said high commodity prices had given some developing economies a boost.China has recently invested heavily in Africa to supply its booming economy with metals and other materials.In West Asia, which includes the Gulf, global oil demand, an improved investment environment and strong economic growth gave the region’s FDI a boost, UNCTAD said.Of the Gulf states, the United Arab Emirates followed by Saudi Arabia attracted the most inward FDI.Gulf oil wealth was also a major contributor to FDI outflows, reaching US$16 billion in 2005, 50 per cent up on 2004.Theoretically, global FDI flows, both in and out, should be equal if totalled up, but varying accounting and reporting practices lead to discrepancies.FDI inflows to South, East and Southeast Asia, including Oceania, reached a new high of US$165 billion in 2005, 19 per cent up on 2004.China was the largest FDI recipient in the region.UNCTAD said the region was increasingly attracting “high-quality” FDI aimed at knowledge-intensive activities, such as manufacturing electronic components.Cross-border mergers and acquisitions have spurred the global increase in FDI flows, UNCTAD said, adding that trans-national companies in developing nations were strengthening their influence.”One of the most significant recent features of globalisation has been the rise of FDI from developing and transition economies,” Panitchpakdi said, citing the rise of developing country metals, oil, technology and garments firms.Overall, the largest FDI recipient was the United Kingdom, followed by the United States and China.The UK figure was given a boost by one large merger, UNCTAD said.The service sector dominated FDI growth, led by banking, telecommunications and real estate.Panitchpakdi warned against protectionist tendencies sparked by fears of job cuts, or national security concerns in the case of mergers and acquisitions involving state-owned companies.Nampa-Reuters”We are witnessing today a profound shift in the world economy, with some developing countries gaining economic and political weight,” UNCTAD Secretary-General Supachai Panitchpakdi said in a statement.The United Nations classifies FDI as the ownership of at least 10 per cent of a firm by a foreign company.Both inward and outward FDI are generally seen by economists as signs of a healthy economy.Among developing nations, West Asia had the highest growth rate of inward FDI, 85 per cent up at a record US$34 billion in 2005 from a year earlier, followed by Africa with a 78 per cent increase to US$31 billion.UNCTAD said high commodity prices had given some developing economies a boost.China has recently invested heavily in Africa to supply its booming economy with metals and other materials.In West Asia, which includes the Gulf, global oil demand, an improved investment environment and strong economic growth gave the region’s FDI a boost, UNCTAD said.Of the Gulf states, the United Arab Emirates followed by Saudi Arabia attracted the most inward FDI.Gulf oil wealth was also a major contributor to FDI outflows, reaching US$16 billion in 2005, 50 per cent up on 2004.Theoretically, global FDI flows, both in and out, should be equal if totalled up, but varying accounting and reporting practices lead to discrepancies.FDI inflows to South, East and Southeast Asia, including Oceania, reached a new high of US$165 billion in 2005, 19 per cent up on 2004.China was the largest FDI recipient in the region.UNCTAD said the region was increasingly attracting “high-quality” FDI aimed at knowledge-intensive activities, such as manufacturing electronic components.Cross-border mergers and acquisitions have spurred the global increase in FDI flows, UNCTAD said, adding that trans-national companies in developing nations were strengthening their influence.”One of the most significant recent features of globalisation has been the rise of FDI from developing and transition economies,” Panitchpakdi said, citing the rise of developing country metals, oil, technology and garments firms.Overall, the largest FDI recipient was the United Kingdom, followed by the United States and China.The UK figure was given a boost by one large merger, UNCTAD said.The service sector dominated FDI growth, led by banking, telecommunications and real estate.Panitchpakdi warned against protectionist tendencies sparked by fears of job cuts, or national security concerns in the case of mergers and acquisitions involving state-owned companies.Nampa-Reuters