UN agency sees better foreign investment appetite
Reuters | Thu Oct 7, 2010
UN agency sees better foreign investment appetite
– 41 countries took investment measures in 2nd, 3rd qtrs
– Trend towards liberalisation, but also bigger state role
GENEVA, Oct 7 (Reuters) — Governments are opening up to outside investment for funds to help their economies recover, with liberalising measures outnumbering those seeking to keep out foreign money, a U.N. report showed on Thursday.
The survey of investment policy in 41 countries in the second and third quarters of this year by the United Nations Conference on Trade and Development (UNCTAD) showed the need for funds outweighed suspicion of foreigners buying up businesses.
At the same time many countries adopted policies to strengthen the role of the state in the economy, for instance through nationalisation in Latin America or stronger regulation of the financial sector, UNCTAD said.
Protectionism remains a serious potential threat to the recovery of foreign direct investment flows on which many developing countries rely to fund their economies, the U.N. agency said in its latest investment policy monitor.
"The overall trend towards attracting more foreign investment can enhance the economic recovery in the aftermath of the financial crisis," UNCTAD, whose surveys of investment flows are highly regarded, said in the report.
This was particularly the case now that public investment has run out of steam in many countries while private investment has yet to reassume its lead role in the global economy.
A greater state role, especially in the financial sector, could contribute to more responsible investment, it said in the monitor, which examines investment measures taken between April and October.
UNCTAD noted that finding the right balance between regulation and investment promotion remained a challenge.
Over the six months at least 27 countries adopted specific investment policy measures, mostly tending towards liberalisation, facilitation and promotion. Countries in Asia were particularly active in steps to facilitate investment.
At least 16 countries adopted investment-related policy measures such as privatisation or tax reduction, but involving tougher financial regulation. The period saw 79 economies add international investment agreements, including 39 double taxation treaties.
(Reporting by Jonathan Lynn)
