Texas A&M International University

United Nations Reports: Foreign Direct Investment Peaks, Future Investments Cautious

Texas A&M International University, Laredo, TX – According to two major reports to be released in the US at Texas A&M International University in Laredo and around the world simultaneously on Wednesday, September 24, the interconnectivity that fires the global economy is increasingly apparent. The research reports, anticipated by global corporate executives and policy makers around the world involved in foreign investment decisions, shows that the blazing Foreign Direct Investment (FDI) of 2007 has cooled considerably in response to economic downturn and financial instability, but continues to be a major engine of economic growth in the long run.
            
The research indicates that global FDI inflows rose in 2007 by 30% to reach an all-time high of $1,833 billion, surpassing the previous record set in 2000, despite the global financial and credit crises which began in the second half of 2007.

These and other findings were published in two reports, the World Investment Report 2008: Transnational Corporations and Infrastructure Challenge and World Investment Prospects Survey 2008-2010, both released worldwide today by the United Nations Conference on Trade and Development (UNCTAD) in Laredo and around the world.
   
Researcher Dr. Tagi Sagafi-nejad, distinguished professor at Texas A&M International University’s A. R. Sanchez Jr. School of Business, said that while the peak is impressive, the continued global business climate appears to augur lower FDI activity for 2008.
            
“The upward trends are apparent, with FDI inflows to developing countries amounting to about $1,248 billion. The US remains the largest recipient country of inflows.  FDI outflows from developed countries are growing even faster than their inflows, exceeding them by $445 billion in 2007.
            
“That said, the sub-prime mortgage crisis has clearly affected world financial markets and created liquidity problems which have lead to higher credit costs. Recent news of the collapse of Lehman Brothers and federal bailouts of Fannie Mae and Freddy Mac, as well as AIG, will likely further discourage FDI.
        
“The weakening dollar has actually helped to stimulate FDI into the US, but the overall downturn seen in our World Investment Prospects Survey shows large transnational corporations (TNCs) being more cautious about their medium-term FDI ambitions,” Dr. Sagafi-nejad said.
            
Sagafi-nejad noted that while those investments may be cautious, they are expected to be moderate over the next three years. This caution for moderation in FDI will be balanced with the persisting trend of TNCs expanding production, employment and sales abroad.
            
“If we look at an analysis by home region, we’re seeing that international ambitions are quickly growing in companies from the developing world, particularly Asia. FDI prospects for developed countries, especially North America and Japan, have dimmed compared to a year ago,” he explained.
            
The Investment Prospects Survey indicates that the most attractive destinations for future foreign investment are China, India, the US, the Russian Federation and Brazil, all rankings unchanged from last year.
            
The most important factors that continue to guide choices in investment location include market growth, size and access to international/regional markets while the quality of business environment, availability of skilled labor, suppliers, infrastructure, legal environment and government effectiveness follow closely.
           
The World Investment Report and its database are available online at http://www.unctad.org/wir and http://www.unctad.org/fdistatistics.
          
The World Investment Prospects Survey 2008-2010 can be obtained at http://www.unctad.org/en/docs/wips2008_en.pdf
            
Texas A&M International University is the only US site for release of the reports.

For additional information, contact Dr. Tagi Sagafi-nejad at tagi.sagafi@tami.edu or by phone at 956.326.2547.

Texas A&M International University is a State-assisted university with 78 undergraduate, graduate or doctoral degrees, including a doctorate in international business offered at the A. R. Sanchez Jr. School of Business.

Situated on the US-Mexico border, it is part of The Texas A&M University System and home to nearly 6,000 students from over 30 different countries.

Journalists who need additional information or help with media requests and interviews should contact the Office of Public Relations, Marketing and Information Services at prmis@tamiu.edu