FOREIGN INVESTMENT

Worldwide FDI Inflows Up 34% for 2006

Global foreign direct investment (FDI) inflows grew in 2006 for the third consecutive year reaching US$1.2 trillion, according to United Nations agency UNCTAD. The total is a 34% increase from 2005, although short of the record US$1.4 trillion set in 2000. The United Nations Conference on Trade and Development (UNCTAD) says that the continued rise in FDI largely reflects high economic growth and strong economic performance in many parts of the world, including in both developed and developing countries. Increased corporate profits (and resulting higher stock prices) boosted the value of the cross-border mergers and acquisitions that constitute a large share of FDI flows. Continued liberalization of investment policies and trade regimes added further stimulus, although in Africa and Latin America there were some notable changes in economic policy towards a greater role for the state, as well as changes in policies that directly concern foreign investors or industries. FDI flows to developed countries in 2006 rose by 48%, well over the levels of the previous two years, reaching US$800 billion. The U.S. recovered its position as the largest single host country for FDI in the world, overtaking the United Kingdom, the top FDI recipient in 2005.