UN report paints gloomy picture of investment prospects

South Africa – along with the rest of the developing world – is likely to find it more difficult than ever to attract investment, according to a just-released United Nations Conference on Trade and Development (Unctad) report titled “Assessing the impact of the current financial and economic crisis on global FDI flows”. All of the three major types of FDI (marketseeking, efficiency-seeking, and resources-seeking) will be impacted by these factors, though with different magnitudes and consequences on location patterns. “The year 2008 marked the end of a growth cycle in international investment that started in 2004 and saw world foreign direct investment (FDI) flows reach an historic record of $1.8 trillion in 2007”. FDI is expected to slow further this year due to a combination of a lack of finance, aversion to risk and poor economic prospects. “Flows into developing economies continued to grow in 2008, but at a much lower rate than the year before. An outright decline in FDI inflows to those countries is possible in 2009.”