By Geir Moulson
September 20, 1999
Associated Press/ Nando Media Geneva- Overseas investments by the world's business corporations surged 39 percent to a record $640 billion last year, a U.N. report said Monday.
Overall, global investment flows will easily exceed $700 billion and could top $800 billion in 1999, said the U.N. Conference on Trade and Development. But developing countries desperate for more cash have less to cheer about, said the report, as much of the new investment in 1998 took the form of ever-larger mergers and acquisitions across the North Atlantic.
The investment share going to developing countries dropped sharply to 28 percent from 37 percent in 1997 and "may be somewhat lower" again this year, the study said. "Basically, what took place last year was an enormous rise in foreign direct investment between the United States, Europe and Japan," said Rubens Ricupero, secretary-general of UNCTAD.
Investment in the United States stood at $193 billion, up from $109 billion the previous year. The European Union attracted $230 billion, up from $126 billion. The inward flow to Japan was $3.2 billion, down marginally from the previous year. The United States remained the most significant investor, shelling out $132.8 billion. As a group, the 15 EU nations invested a total of $386.1 billion, $114.2 billion of which was Britain's. Investment in Asia and the Pacific region as a whole fell 11 percent to $85 billion last year, but it seems to have "weathered the financial crisis," the report said.
Some $5 billion flowed into South Korea, up from less than $3 billion in 1997. Thailand saw an 87 percent rise in investment as crisis-hit financial institutions were bought by foreign investors. China, still the most popular destination for foreign investment among developing Asian countries, attracted $45.5 billion last year, up from $44.2 billion the year before. But the U.N. projected a fall to $35 billion this year. The Philippines also gained, but investment in Hong Kong, Indonesia, Singapore, Taiwan and Vietnam declined. Spending abroad by Asian corporations, at $36 billion, was down by almost a quarter.
Russia received $2.2 billion - a 60 percent fall from the previous year, marking low investor confidence. But investment elsewhere in central and Eastern Europe rose by 25 percent to $16 billion. Latin America and the Caribbean came through financial turbulence to register a 5 percent rise in incoming investment. Of the total $71.7 billion entering the region, Brazil accounted for $28.7 billion. Foreign investment in Africa fell by almost 12 percent in 1998, to $8.3 billion from $9.4 billion - largely because of decreasing flows to South Africa as its privatization program slowed.
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