CRISIS SLOWS NORTH-TO-SOUTH INVESTMENT

  • by Supachai Panitchpakdi
  • Inter Press Service

The current crisis has precipitated a significant downturn in world foreign direct investment (FDI) flows which over the past year has spread to all sectors and regions. 2008 marked the end of a growth cycle in international investment that began in 2003 and reached a historic high of nearly $2 trillion in 2007, writes Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD).

In addition to private capital flows, many developing countries depend on foreign aid to support investment. In the context of the current crisis, they lack the financial resources to successfully compete with the stimulus and rescue packages put in place by advanced and emerging economies, which now amount to more than $5 trillion. In the cases of China and Australia, for example, public infrastructure spending, as a component of their stimulus packages, has been increased by 3% of GDP. The sheer scale of these measures can easily overwhelm the policies that developing countries pursue to attract and retain FDI. Developed countries should therefore take steps to help developing countries deal with the crisis.

(*) Supachai Panitchpakdi is the Secretary-General of the United Nations Conference on Trade and Development (UNCTAD).

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© Inter Press Service (2009) — All Rights ReservedOriginal source: Inter Press Service