the FDI statistics for 2003

Filed in archive Global Economy on September 25, 2004

UNCTAD.org has published the latest "World Investment Report" of global investment activities (PDF, 1800k). This document is a very rich resource for statistics (486 pages!) in global investment activities and even lists most trans-national M&A activities.

"FDI inflows declined by 18% (to $560
billion) in 2003, following a massive decline
of 41% in 2001 (from $1.4 trillion in 2000 to
$818 billion) and another 17% in 2002 (to $679
billion) (figure I.1). But FDI outflows rose in
2003 by 3%, to $612 billion,1 and prospects
are good for 2004 and beyond (section D
below). Flows to developing countries rose
already by 9%.2 Excluding Luxembourg, China
was the largest host country ahead of France
and the United States. Cross-border mergers
and acquisitions (M&As) -- the key driver of
global FDI since the late 1980s -- remain weak,
but they started to pick up in 2004, joining
other healthy factors. Policies on FDI continue
to become more liberal, and both countries and
enterprises have been increasing their degrees
of transnationality."

"
Foreign direct investment is increasingly
shifting towards services. Service industries that,
until recently, were largely national, are
becoming transnational. All countries are affected
by the rise of services FDI and the broad-based
growth of service TNCs. What does this mean
for the development prospects of host countries?
FDI in services, as in manufacturing, has the
potential to enhance, directly and indirectly, the
efficiency, productivity and supply capacity of
host-country industries, thereby benefiting the
economy as a whole. But it can also entail risks
and costs against which the benefits need to be
weighed carefully.



...The tradability of services
Offshoring reflects nothing less than a
revolution in the tradability of services.
Traditionally, most services have been �nontradable�
in that they require buyers and sellers
to be in the same place at the same time. Unlike
physical products, they could not be traded
between parties located in different countries; a
haircut, for instance, is impossible to deliver across
a distance. Many services, however, do not require
physical proximity, but have usually taken place
face-to-face because of technical constraints,
habits or customs.