Geography Reference
In-Depth Information
locations are occupied by developed economies, including Singapore as
number 5, and Hong Kong as number 15 (UNCTAD 2005).
Yet, as we have seen, one of the major outcomes of the general trends
towards market liberalization by developing and transition economies is
that these countries are increasingly sought out as locations for FDI from
developed economies. Nonetheless, inward FDI exhibits different levels
of relative importance in different host economies. Amongst developing
and transition countries, the trans-nationality index of openness, which
indicates the scale of inward multinational investment in terms of FDI
inflows, stocks, value-added and employment relative to total GDP, ranks
South Africa 12th, Brazil 22nd, Russia 31st, China 32nd, India 36th, and
Indonesia 38th (UNCTAD 2007). In general, across all developing and
transition economies, the relative trans-nationality openness to FDI tends
to be higher in small countries and lower in the larger economies. This is
also broadly true for the BRIICS countries, although Indonesia is relatively
more closed than its scale might suggest, while China is relatively more open
than its scale would suggest. On the other hand, in terms of the national
FDI performance rankings for developing and transition economies, China
is ranked 45th, Brazil 62nd, Russia 88th, India 112th, South Africa 126th
and Indonesia 136th (UNCTAD 2005). Yet, FDI performance rankings
are affected by investment yields, and these tend to favour countries domi-
nated by high risk primary, extraction and raw material industries.
Overall, taking account of all of the relevant risk, structural and
potential performance factors, prior to the global financial crisis of
2008, UNCTAD survey evidence of multinational executives' perceptions
regarding the most attractive locations for FDI over the coming years
found that China was ranked as the number 1 country in the world, fol-
lowed by India in second position, Russia with number 4, and Brazil with
number 5 (UNCTAD 2005, 2007). The sluggish post-crisis performance of
advanced countries suggests that perceptions are likely to have been bol-
stered over recent years. Consequently, these perceptions would suggest
that outward FDI - and many related MNE functions and operations
- will continue to flow in very large quantities from developed countries
into these developing and transition countries over the foreseeable future.
As such, these countries are likely to become increasingly open and inte-
grated into the global economic system. However, while the flows of
foreign investment into particular developing and transition economies
are expected to increase over the next few years, for the foreseeable future
the nature of these flows is still likely to remain markedly different from
the inflows into developed economies. There are two qualifying aspects
to such differences, and these relate to the mode of FDI and the relative
importance of R&D-related foreign investment in these countries.
