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International Investment Perspectives 2006

image of International Investment Perspectives 2006

This annual report reviews recent developments in international direct investment, includes recent statistics and highlights policy responses that will help countries reap the full benefits of investment.  This edition's special focus is on legal and policy issues arising from international investment agreements.  The articles in this section investigate novel features of recent bilateral investment treaties; options for improving the system of investor-state dispute settlement; and the consolidation of claims as an avenue for improving investment arbitration.   Other articles in this volume cover how new technologies are a force advancing the closer integration of national economies;  the challenges and opportunities for policy makers that arise from international investor participation in infrastructure; recent evidence of source (or "home") country benefits of outward direct investment; and the role of the OECD peer review process in building investment policy capacity.

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Trends and Recent Developments in Foreign Direct Investment

The global environment for FDI improved in 2005. Macroeconomic growth gained momentum in several OECD countries. At the same time, corporate profitability was generally strong, interest rates were low and equity valuation in most countries firm, all of which imply that ample liquidity was available to those companies wanting to invest abroad. Consequently, direct investment into OECD countries picked up in 2005 and reached an estimated USD 622 billion. This represents a 27 per cent increase over 2004. 2005 was the fourth-highest year on record in terms of inward FDI flows to OECD countries. Outside the OECD area, economic developments have moved even faster. The Chinese economy is now firmly established as one of the world’s foremost destinations for FDI and India, enjoying macroeconomic growth approaching Chinese rates, is quickly becoming a magnet for international direct investment. Countries that were weighed down by financial and macroeconomic crises in the late 1990s and around 2000 have also attracted renewed interest from international direct investors. At same time, some of the large emerging economies are also assuming an increasingly active role as outward investors.

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