As with other economic activities, foreign direct investment
(FDI) flows have undergone dramatic changes since the end of 2008,
when the current economic and financial crisis first hit home. The
unusual magnitude of the ongoing crisis has raised major concerns
about the propensity and capability of transnational corporations
(TNCs) to continue investing and expanding abroad. Faltering
profits, reduced access to financial resources, and declining market
opportunities, as well as the perceived risk of a possible worsening
of the global economic downturn are among the reasons for a fall
in FDI flows, as witnessed in 2009. Falling FDI in turn also raises
concerns among host countries – especially those in the developing
world that rely on international investments to finance their domestic
growth and employment creation.
While some signs of a pick-up in FDI flows have been observed
since the second quarter of 2009, their overall level in mid-2010
remained lower than two or three years ago. It is not yet clear that a
rebound in FDI is underway (UNCTAD, 2010). When can a clear-cut
recovery in FDI flows be expected? When this occurs, which host
regions and industries will be most favoured by TNCs? Which home
countries and regions will show the greatest FDI dynamism? One
possible way to gain insight into these and other issues is to ask TNC
executives directly about their international investment strategies,
especially in the context of recent developments. This is the focus of
this year’s World Investment Prospects Survey (WIPS).