• FDI and growth

FDI and growth

This year’s World Investment Report by the UN Conference for Trade and Development (UNCTAD), focuses on the rise of foreign direct investment (FDI) by transnational corporations (TNCs) from developing and transition economies.

The rise of FDI from developing and transition countries been particularly marked in the past ten years, and a growing number of TNCs from these economies are emerging as major regional – or sometimes even global – players. For low-income countries, FDI from developing countries can be of great importance. In some of them, it accounts for a significant share of all FDI flows.

The report also discusses:

• the development implications of the rise of these new sources of FDI
• policy responses, for both home and host developing countries
• the latest data on FDI and traces the global and regional trends of FDI and international production by TNCs

The report concludes that global FDI inflows rose substantially in 2005. This is characterised by:

• a marked increase in the inflows to developed countries
• rising global demand for commodities reflected in the steep increase in natural resource-related FDI
• continued growth in the services sector
• Asia as a main magnet for FDI flows, followed by Latin America, where re-invested earnings have played a major role
• a small share of FDI directed toward Africa but with an FDI growth rate that has nonetheless surpassed those of other developing regions

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