• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

G. Srinivasan

Mr Sauwant said, "Whether or not FDI flows rise next year would depend upon the performance of the world economy in general and particular countries in particular."

New York , Sept. 18

DESPITE the failure of the Cancun Ministerial in not taking up the new issue of investment, foreign direct investment (FDI) flows into the developing countries world would not decline this year, a senior official of the United Nations Conference on Trade and Development (Unctad), Mr Karl P. Sauwant, has said.

Talking to Business Line at the UN headquarters here, the senior official said the national, bilateral and multilateral framework on investment can be extremely effective in keeping investors out by not simply allowing investment flows. "But once it is enabling in nature, economic determinants can take over," he said, adding that FDI flows to developing countries reached $160 billion probably from less than $10 billion in 1980. "Once a regulatory framework is in place, then the economic determinants assert themselves."

Mr Sauwant said that all countries are undertaking measures to improve their investment regulatory framework. "We have 248 regulatory changes in 2002 - 95 directed in the liberalisation front. Though you have no guarantee about such changes ensuring FDI flows, it does raise the possibility of foreign direct investment flows."

Asked about the pick-up in FDI flows next year from the decline in the last couple of years, Mr Sauwant said, "Whether or not FDI flows rise next year would depend upon the performance of the world economy in general and particular countries in particular." He, however, expects China to continue to do well as it is liberalising in "a big way". He said this year the FDI flows would be around $650 billion, with Central and Eastern Europe getting a little bit more and one or another region a little bit less.

Mr Sauwant said that "we should not forget that investment flows are like waves on top of the ocean. They can ebb or flow and what really matters is that there might be two miles of water under it and we tend to focus on the waters. Hence what matters is the stock of FDI and it is a stock that is part of the international production system. This in itself is important for the global economy."

The Unctad official said FDI is defined as equity investment (usually money being brought in by the promoters), loans given to foreign affiliates and reinvested earnings. In many countries, reinvested earnings are quite substantial, he added.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Is modernisation of TN's ginneries viable?

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line