Overseas FDI Set to Increase

Instrument companies’ increasing investment in emerging economies will continue if a new survey is any indication. According to a survey of 192 multinational corporations by the United National Conference on Trade and Development (UNCTAD), 68% of respondents expect to grow FDI flows in 2007 compared to 2006, 19% expect them to remain the same, and 13% expect them to decrease. In 2009 compared to 2006, 71% of respondents expect to increase FDI flows, 19% expect them to remain the same and 10% expect them to decrease. Forty-six percent of respondents indicated that “a lot” of “production of goods and services” would be the corporate function “most likely to be relocated or expanded overseas in 2007-2009,” while 27% indicated “a little” of such functions would be. Forty-three percent of respondents indicated that “a little” of “distribution/sales offices” would be “most likely to be relocated or expanded overseas in 2007–2009,” and 32% indicated none would be. However, relocating R&D was disfavored. Fifty-three percent of respondents stated that R&D would not be relocated. Only 17% stated that “a lot” of R&D would be relocated, while 30% stated “a little” would be. Fifty-two percent of respondents listed China as one of their top 5 FDI locations for the 2007–2009 period, followed by India (41%), the US (35%), Russia (21%), Brazil (13%) and Vietnam (12%). For the 65 companies surveyed that currently have FDI in South Asia, East Asia and Southeast Asia, 74% expect to increase it over the next three years, the highest percentage indicating an increase among any region. Within this region, China (52%) and India (41%) were cited as the “most attractive business locations.” The US and Canada, as well the EU-15, can also expect increased FDI as the 70 and 66 companies with FDI in those regions, respectively, expect to increase FDI 57% for each region. The only other region in which more than 50% of companies with FDI in a region are planning to increase it is the EU-12, where 61% plan increases. Poland was cited as the most attractive business location within that region (6%).

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