Developed countries maintained their position as the largest net outward investors, as outflows soared to a record $1,692 billion. The largest outward investors - the United States, the United Kingdom, France, Germany and Spain (in that order) – accounted for 64% of the total outward FDI of the group.
The policy environment for FDI in a number
of developed countries continues to be one of greater
openness, with some exceptions. There are, however,
growing concerns over the possible negative effects
of cross-border investments by SWFs, as well as
private equity and hedge funds.
FDI to and from developed countries is
expected to fall because of the dampening effects of
the financial market crisis, combined with weaker
economic growth in these economies. The value
of cross border M&As in developed countries fell
considerably in the first half of 2008, compared
with the second half of 2007. In UNCTAD's World
Investment Prospects Survey 2008-2010, 39% of
the responding TNCs anticipated an increase in FDI
inflows into developed countries compared with more
than 50% in last year's survey.
There are huge unmet investment
needs for infrastructure in developing
countries.
The provision of good quality infrastructure is
a prerequisite for economic and social development.
Indeed it is considered one of the main preconditions
for enabling developing countries to accelerate or
sustain the pace of their development and achieve the
Millennium Development Goals (MDGs) set by the
United Nations.
Moreover, the future investment needs of
developing countries in infrastructure far exceed
the amounts being invested by governments, the
private sector and other stakeholders, resulting in a
significant financing gap. On average, according to
World Bank estimates, developing countries currently
invest annually 3-4% of their GDP in infrastructure;
yet they would need to invest an estimated 7-9%
to achieve broader economic growth and poverty
reduction goals.
Partly because of the scale of investment
required in infrastructure, there has been a fundamental
change in the role of the State around the world.
Governments have opened infrastructure industries
and services up to much greater involvement by the
private sector - including TNCs.
After the Second World War, and until the 1980s, infrastructure
industries were by and large the purview of the State,
sometimes through corporatized forms, such as Stateowned
enterprises (SOEs). Since then they have been
gradually liberalized, though the pace and degree
have varied by industry and country.
As a result, the relationship between the State and the private sector
has evolved, with the State increasingly assuming the
role of regulator of activities performed by private,
and often foreign, companies. This new relationship
will continue to change in response to technological
progress, growing experience with private sector
involvement and shifting political priorities.
In addition to developing country TNCs in
infrastructure (mentioned below), "new players" in
infrastructure have emerged including a heterogeneous
set of institutions belonging to two broad groups:
private equity investors, and State owned or
Government linked entities such as sovereign wealth
funds.