FDI on the rise

By Alex Singleton | 25 June 2005

The Wall Street Journal reports that foreign direct investment by industrialized countries increased by 12% last year:

Investment continued to flow into China - $54.9 billion in 2004, up 17% from the year before. China is beginning to emerge as an investor in companies and properties in rich countries, targeting raw materials and advanced technology, as highlighted by the $18.5 billion bid made by China's Cnooc Ltd. for Unocal Corp., an energy company.

But while China gets the attention, "countries like India and Russia are coming into their own" as destinations for rich-country foreign direct investment, said Hans Christiansen, a senior economist in the OECD's directorate for financial and enterprise affairs. In Russia companies are beginning to build sites to manufacture and distribute products, while the OECD says that investment in India is also picking up.

Latin American economies are beginning to overcome the effects of the 2002 Argentinian currency crisis and are witnessing a rebound in investment.

As the OECD itself says, the figures show "inflows in 2004 into Argentina (USD 4 billion in 2004), Brazil (USD 18 billion) and Chile (USD 8 billion) [were] all around twice the levels recorded in 2003."

This is all excellent news, of course.