China, India Look Top Investment Targets to 2012-UN

By Robert Evans

GENEVA, Sept 7 (Reuters) – The world’s biggest companies are planning to boost their international investments over the next two or three years, with most spending planned in major emerging economies, according to a United Nations study. China, India and Brazil are the top three target countries for foreign direct investment (FDI) until the end of 2012 with the United States, for years number one, now in fourth place, the U.N. trade and development agency UNCTAD said.

The Geneva-based agency, which acts as a think-tank on economic trends in developing nations, said the global economic crisis from 2008 was less harmful than feared for investment.

The conclusions were based on a survey of the FDI climate among 236 leading multinational corporations and 116 investment promotion agencies.

Global investment flows slumped in 2008-09 as a result of the economic downturn but are expected to recover slowly in 2011 and 2012.

Mergers and Acquisitions

Incoming FDI, mostly from richer countries like the United States and the bigger powers in the 27-nation European Union, is a key component in development plans for many poorer countries.

But in recent years big firms based in the more successful emerging economies have taken a growing role, investing in both rich and poor nations, often through mergers and acquisitions.

The crisis had accentuated a shift of the geographical focus of FDI towards developing and former communist economies.

These countries accounted for 9 of the top 15 priority FDI destinations for global firms, UNCTAD said.

China was the number one attraction for the second year, with India up from third in 2009 and Brazil up from fourth, pushing the United States down from second.

Russia was fifth, the same as in 2009, but Mexico leapt to sixth place from 12th last year, leapfrogging Britain at seventh, Vietnam at eighth and Indonesia at ninth. Germany, Europe’s biggest economy, fell from seventh to 10th.

Thailand, Poland, Australia, France and Malaysia were the five countries next most favoured, the UNCTAD survey showed.

UNCTAD said optimism that the worst of the crisis was over had encouraged companies to revise investment programmes, with some 58 percent saying they would boost FDI in 2011-12.

But it noted that optimism was greater among multinationals based in the developing world than among those in richer economies, especially those headquarted in Europe.

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