Overall, prospects for new FDI to the region remain very promising. Sustained economic growth, demographic changes, favourable business sentiments and new investment opportunities were among the main factors contributing to the region's good performance in 2007, and they should continue to attract FDI in the near future.
FDI outflows from South, East and South-East
Asia also reached a new high, amounting to
$150 billion, reflecting the growing importance of
developing countries as outward investors. Intraand
inter regional flows are a particularly important
feature. But firms are investing in developed countries
as well, not least through cross border M&As. SWFs
from the region have emerged as significant investors,
contributing to the region's rapidly growing outward
FDI stock: this jumped from $1.1 trillion in 2006 to
$1.6 trillion in 2007.
West Asia also saw record flows in
both directions...
FDI in West Asia rose by 12% to $71 billion,
marking a new record and a fifth consecutive year
of growth. More than four fifths of the inflows
were concentrated in three countries: Saudi Arabia,
Turkey and the United Arab Emirates, in that order. A
growing number of energy and construction projects,
as well as a notable improvement in the business
environment in 2007, attracted FDI into members of
the Gulf Cooperation Council (GCC). For example,
Qatar experienced a significant rise in inflows – more
than seven times higher than in 2006.
FDI outflows from the region in 2007 increased
for the fourth consecutive year, to $44 billion
nearly six times its level in 2004. The GCC countries
(Kuwait, Saudi Arabia, the United Arab Emirates,
Qatar, Bahrain and Oman, in that order) accounted
for 94% of these outflows, reflecting in part their
desire to diversify away from oil and gas production
through investments by SWFs. Intraregional FDI was
significant, particularly from oil rich countries, as
confirmed by a growing number of greenfield projects
and the increasing value of cross border M&As.
FDI inflows into West Asia are expected to
rise in 2008, as countries in the region have remained
largely unaffected by the sub prime mortgage crisis,
and a significant number of intraregional investment
projects are in the pipeline.
... while the surge of FDI into Latin
America and the Caribbean was mainly
driven by the demand for natural
resources.
Latin America and the Caribbean saw inflows
rise by 36% to a historic high of $126 billion. The
increase was the highest in South America (66%),
where most of the $72 billion worth of inflows
targeted the extractive industries and natural-resourcebased
manufacturing. Inflows to countries in Central
America and the Caribbean (excluding offshore
financial centres) increased by 30% to $34 billion,
despite the economic slowdown in the United States.
This resilience was partly explained by the dynamism
of FDI in mining, steel and banking, which are not
oriented primarily towards the United States market.
FDI outflows from the region fell by 17%
to $52 billion, mainly reflecting a return to more
"normal" levels of outward investment from Brazil.
Latin American TNCs, mainly from Mexico and
Brazil, continued to internationalize, competing for
leadership in such industries as oil and gas, metal
mining, cement, steel, and food and beverages. In
addition, many new Latin American companies
began emerging in new sectors such as software,
petrochemicals and biofuels.
In the extractive industries, in which FDI
increased as a result of the high commodity prices,
the picture differed between oil and gas and metal
mining. In metal mining, the scope for inward FDI is
greater, as there are no major State owned companies
in the region, except Codelco in Chile. In oil and gas,
by contrast, the dominant position, or even exclusive
presence, of State owned oil and gas companies
limits the opportunities for foreign investors.
This situation was accentuated in 2007, as a number of
countries, including Bolivia, the Bolivarian Republic
of Venezuela and Ecuador, adopted policy changes
to increase taxation and further restrict or prohibit
foreign investment in oil and gas.