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China, India top FDI destinations

Geneva, September 7, 2010

The world's biggest companies are planning to boost their international investments over the next two or three years, with most spending planned in major emerging economies, according to a United Nations study.

China, India and Brazil are the top three target countries for foreign direct investment (FDI) until the end of 2012 with the United States, for years number one, now in fourth place, the UN trade and development agency Unctad said.   

The Geneva-based agency, which acts as a think-tank on economic trends in developing nations, said the global economic crisis from 2008 was less harmful than feared for investment.   

The conclusions were based on a survey of the FDI climate among 236 leading multinational corporations and 116 investment promotion agencies.   

Global investment flows slumped in 2008-09 as a result of the economic downturn but are expected to recover slowly in 2011 and 2012.        

Incoming FDI, mostly from richer countries like the United States and the bigger powers in the 27-nation European Union, is a key component in development plans for many poorer countries.

But in recent years big firms based in the more successful  emerging economies have taken a growing role, investing in both rich and poor nations, often through mergers and acquisitions.   

The crisis had accentuated a shift of the geographical focus of FDI towards developing and former communist economies. These countries accounted for 9 of the top 15 priority FDI destinations for global firms, Unctad said.
 
China was the number one attraction for the second year, with India up from third in 2009 and Brazil up from fourth, pushing the United States down from second.   

Russia was fifth, the same as in 2009, but Mexico leapt to sixth place from 12th last year, leapfrogging Britain at seventh, Vietnam at eighth and Indonesia at ninth.

Germany, Europe's biggest economy, fell from seventh to 10th. Thailand, Poland, Australia, France and Malaysia were the  five countries next most favoured, the Unctad survey showed.   

In July, Unctad predicted that total FDI flows could rise to $1.3-$1.5 trillion in 2011 after $1.2 trillion this year, and jump to $1.6-$2 trillion in 2012.   

The highest total on record was $2.1 trillion in 2007, but this fell 16 percent in 2008, then a further 37 percent to $1.11 trillion in 2009 as the crisis left companies slashing spending.

Unctad said optimism that the worst of the crisis was over had encouraged companies to revise investment programmes, with some 58 percent saying they would boost FDI in 2011-12. But it noted that optimism was greater among multinationals based in the developing world than among those in richer economies, especially those headquarted in Europe. - Reuters




Tags: China | India | investment | FDI | UNCTAD |

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