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International Investment Perspectives 2003

image of International Investment Perspectives 2003

Foreign Direct Investment (FDI) has cooled dramatically. Many OECD countries are presently recording inflows of less than 25% of what they received just two years ago. However, developing countries and transition economies have been less affected by the decline. They now receive more than a third of worldwide FDI flows, underscoring the potential of direct investment to act as a catalyst for growth and sustainable development.

This volume contains an assessment of trends and recent developments, an article on China's investment policy reform, an article on policies and incentives for attracting foreign direct investment, a special focus on transparency and investment, and a report on a survey of implementation of methodological standards for direct investment.

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Trends and Recent Developments in Foreign Direct Investment

Foreign direct investment in OECD countries fell 20 per cent in 2002, following already steep declines the previous year. Preliminary indications point to a further drop in 2003. A total of USD 490 billion in investment flowed into OECD countries in 2002, down from USD 615 billion in 2001 and about one-third the level recorded in 2000. The continued global economic slump, relatively weak stock markets, uncertainties over international security, and heavy debt loads in once-booming sectors like telecommunications all contributed to the decline. The drop was concentrated mainly in the United States and the United Kingdom. FDI flows into other OECD countries, taken as a whole, remained about flat in 2002. Based on mergers and acquisitions data for the first five months of the year, OECD countries could be heading for a further drop in FDI in 2003 of 25 to 30 per cent. In contrast, investment flowing out of the 30 OECD member countries showed a more modest decline. Outward FDI hit USD 609 billion in 2002, down from USD 690 the prior year. Developing countries were consequently major beneficiaries of net outflows from OECD countries. For the first time ever, China became the world’s largest recipient of FDI in 2002 with total inflows of USD 53 billion...

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