FDI flows to decrease this year for the first time in 30 years

20-09-2001

Global flows of foreign direct investment in the year 2000 soared by 18 percent to a record 1.3 trillion USD. However, this year the trend is expected to be reversed, according to the World Investment Report of 2001 which was presented by the United Nations Conference on Trade and Development. The report was presented in 70 cities around the world, including on Tuesday the Czech capital Prague.

The World Investment Report predicts that global foreign direct investments are likely to decline by 40 percent this year to 760 billion USD. This would represent the first drop since 1991 and the most significant fall for three decades. According to the report, the reason for the decline is that the main motor of foreign direct investment, cross-border mergers and acquisitions, are declining as a result of failing world-wide economic growth.

However, this downturn in global investment will not effect all economies. Fortunately, the level of foreign investment in Central and Eastern Europe is expected to remain at its current levels. And according to the director of the UN Information Center in Prague, Andreas Nicklisch, flows of foreign direct investment are generally very unevenly distributed.

The report suggests that leading companies in Central and Eastern Europe are "about to establish themselves as prominent players" in the global investment arena. Last year, the growth of outflows from the region surpassed that of inflows, and for most of the top 25 non-financial trans-national corporations in the region, foreign activities grew faster than their domestic activities in 1999.

Terrorist attacks on the US to have little impact

The World Investment Report was of course compiled before the tragic events in the United States which may of course render parts of the report obsolete, as nobody is exactly sure how the attack on New York will effect the global economy. Rene Samek is the marketing director of the Czech government's agency CzechInvest, set up to assist foreign investors with placing investments in the Czech Republic.

Linkages

One of the main aims of the world Investment Report is to promote linkages between investors and local suppliers. The director of the UN Information Center in Prague, Andreas Nicklisch:

The CzechInvest agency has a special programme to develop linkages between investors and local suppliers, as mentioned by Mr. Nicklisch and I asked Vit Svajcr, director of the Supplier Development Department of CzechInvest, to explain the ins and outs of the programme:

20-09-2001