WASHINGTON - The United States has
reemerged as the world's premier destination for
foreign investors but could face stiffer
competition for foreign assets from China and
other developing economies, a UN report says.
Foreign investment in the United States
grew by 74% to US$175.4 billion in 2006, almost
twice the global growth rate of 38 %, the UN
Conference on Trade and Development (UNCTAD) said
in its 2007 World Investment Report.
US
assets thus attracted more than one-tenth of the
$1.3 trillion
in
foreign direct investment inflows worldwide,
UNCTAD said. Flows to the advanced economies rose
by 45% to $857 billion. Investments in developing
and former Soviet bloc countries rose by 21% (to
$379 billion) and 68% (to $69 billion),
respectively.
Last year's total was the
highest since 2000, when the amount of foreign
corporate money flowing into all countries peaked
just above $1.4 trillion before technology stocks
began to tumble. Terrorist attacks in the United
States the following year added to a worldwide
slowdown.
China saw its inflows fall for
the first time in seven years to $69.5 billion
from $72.4 billion in 2005, UNCTAD said. China's
investments in the rest of the world surged,
however. Its state-owned and private companies
poured $16.1 billion into foreign assets last
year, up 34 % from $12 billion the previous year.
Chinese firms' foreign holdings seem
likely to rise further, UNCTAD said.
Last
month, China launched a $200 billion investment
fund that could come to rival US investments in
the rest of the world. Last year, US corporations
bought up foreign assets worth $216.6 billion.
South, Southeast and East Asian firms'
investments in other regions swelled by 60% to
$103 billion last year, equivalent to slightly
more than half of the record $200 billion invested
in the region by foreign firms.
Most
corporate money - including most Asian investment
overseas - flows into the US and European
economies. However, China, India, and other
rapidly growing Asian economies in need of energy
and metals have fueled an investment boom in
Africa.
Corporate money flowing into the
continent doubled between 2004 and 2006 to a
record $36 billion, the report said. Asian firms
generated more than a quarter of the total and
look poised to increase their share. This is no
mean feat since most of them are tiny compared to
US and European counterparts and most are
newcomers to a continent dominated by Western
investors since colonial days.
About half
the total went to cross-border mergers and
acquisitions and the other half was plowed into
so-called greenfield investments, such as new
factories or mines built from scratch.
Transnational corporations from Asia accounted for
half of the mergers and acquisitions.
Eight billion dollars, or more than
one-fifth of all foreign investment in Africa,
went to the continent's least developed countries
last year, reversing a two-year decline. The
largest increases took place in Burundi, Djibouti,
Guinea-Bissau, Somalia, Madagascar, Ethiopia, Cape
Verde, Gambia and Sudan.
"The commodities
boom should provide opportunities for development
and poverty alleviation in mineral-exporting
countries," UNCTAD said. Results so far have been
mixed and a number of countries are seeking to
reduce foreigners' stakes in local companies or to
increase the share of revenues that foreign firms
must reinvest locally or share with host
governments.
"Ultimately, the overall
impact of revenue generated will be determined by
the way it is shared between the foreign companies
and the host country, and on how government's
portion of the revenue is managed, distributed,
and used," the report said. "Funds should be used
to support development objectives and the needs of
current and future generations," it added.
For their part, African firms invested a
record $8 billion overseas, up from $2 billion in
2005.
Foreign investment in Latin America
and the Caribbean rose by 11% to $89 billion but
most of this went to the region's offshore
financial centers. Outflows from Latin America and
the Caribbean, excluding those from offshore
financial centers, rocketed to $43 billion in
2006, an increase of 125% over the previous year.
Brazil led the outward charge with $28 billion
invested overseas - a mammoth advance over $3
billion the previous year and enough to exceed
inbound investments for the first time.
Southeast Europe and the Commonwealth of
Independent States received $69 billion in foreign
investment last year, a 68% rise, while investing
$19 billion overseas, a 27% increase driven mainly
by Russian firms.
West Asia - a 14-country
demarcation broadly consistent with what is called
the Middle East - saw a 44% rise in inflows to $60
billion while investing $14 billion overseas, 5%
more than in 2005, UNCTAD said.
Seven of
the world's top 20 investment hosts are in
developing regions. They are China, Hong Kong,
Russia, Singapore, Turkey, Mexico, Brazil, and
Saudi Arabia.
Three of the top 20 sources
of foreign investment come from developing
regions: Hong Kong, Brazil and China.
Global firms from advanced economies
generated 84% of all outward investment in 2006,
with the remaining 16% coming from corporations
based in developing regions and the former Soviet
Union, UNCTAD said.
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