Dear Colleagues,

The Vale Columbia Center on Sustainable International Investment has released the following:

Inward FDI in Colombia and its policy context, 2012, by Miguel Posada Betancourt
Colombia’s current Government, in office since August 2010, has continued to pursue in 2010- 2011 the open policies established by the previous one. The country continues to receive increasing amounts of foreign direct investment (FDI) and has the potential to maintain this positive trend. Although there have been some modifications in the regulatory framework and uncertainty regarding sustainable investment, 2010 witnessed the continuation of positive FDI growth. In 2011, credit-rating agencies recognized the country’s efforts and raised Colombia’s debt rating up to investment grade, a rating that was lost eleven years ago. To facilitate the further internationalization of the Colombian economy, the Government is expanding the number of its investment and commercial treaties to a wider range of foreign economies. Among others, new bilateral investment treaties with India, China and the United Kingdom, as well as other initiatives, could have a positive impact on IFDI growth and its contribution to economic development.

Inward FDI in Singapore and its policy context, by Locknie Hsu*
Inward foreign direct investment (IFDI) has long been an important feature of the Singapore economy, and Singapore remains an attractive host to FDI. Apart from a brief decline in 2002, FDI inflows have generally been strong in the decade 2000-2010. They reached a peak in 2007 at US$ 37 billion, just before the global financial and economic crisis of 2008-2009. In 2008, inflows declined sharply to US$ 8.6 billion, before rapidly rebounding to reach US$ 38 billion in 2010. Singapore has moved from an economy primarily involved in manufacturing consumer goods in labor-intensive industries in the 1960s, to one producing high value-added goods and a variety of complex services in the 2000s. Investment policies have evolved to attract high-value added industries as well as targeted cluster activities, including those in biomedical sciences, logistics and research and development (R&D). At the end of 2010, the stock of FDI in Singapore stood at US$ 470 billion. In recent times, the Netherlands, the United States, Japan, and the United Kingdom have been the top sources of FDI in Singapore. Environmental policies are increasingly emphasized in the regulation as well as attraction of business activity, including by foreign MNEs.

Inward FDI in the United Kingdom and its policy context, by Nigel Driffield, Sandra Lancheros, Yama Temouri, and Ying Zhou

Over the past 30 years, the United Kingdom (UK) has performed exceptionally well in consistently attracting significant volumes of inward foreign direct investment (IFDI). Of all foreign affiliates located in the EU-27 in 2010, 15% were in the United Kingdom (more than 45,000 affiliates). These foreign affiliates employed over 3.7 million workers, representing 13% of the employed UK labor force. IFDI stock represented an impressive 48% of the United Kingdom’s GDP in 2009, as well as in 2010, when it reached US$ 1.1 trillion, the second largest globally after that of the United States. IFDI flows, which declined considerably in 2008 as well as 2009 and 2010, amounted to US$ 51 billion in 2010 and were just over 20% of gross fixed capital formation. According to UNCTAD data, in 2011, IFDI stock in the United Kingdom rose to US$ 1.2 trillion and IFDI flows, to US$ 54 billion. The recent global financial and economic crisis has had a significant negative impact on the investment of foreign multinational enterprises (MNEs) and has interrupted the upward trend in UK IFDI seen till then. However, it is hoped that the continued strength and the location of the UK economy, together with coordinated policy measures by the Government, will lead to a renewed surge in IFDI.

Inward FDI in New Zealand and its policy context, by Peter Enderwick

New Zealand, with a low domestic savings rate, has long depended on inward foreign direct investment (IFDI) to facilitate growth and development. The country’s IFDI stock reached US$ 70 billion in 2010, and averaged 51% of GDP over the decade 2000-2010. While recent inward FDI flows, US$ 636 million in 2010 and US$ 3.4 billion in 2011, have been lower than those of other comparable economies, reliance on IFDI is high. New Zealand's policy toward IFDI is based on the creation of an attractive investment climate (low costs of doing business, low levels of corruption, few restrictions); few specific incentives are offered. Major investment sources are Australia and the United States. IFDI is significant in mining, trade and the banking and finance industries. While there is considerable public disquiet regarding the levels and sources of inward investment, future prospects look strong with the recently re-elected Government committed to further privatization.

Outward FDI from Portugal and its policy context, 2012, by Vitor Corado Simões and Rui Manuel Cartaxo

In 2010, Portugal’s outward foreign direct investment (OFDI) was severely affected by the global economic and financial crisis, with flows recording a negative figure of -US$ 8.4 billion, the lowest in an ever-steeper declining trend exhibited since 2005. Nevertheless, Portugal’s OFDI stock increased almost three-fold between 2000 and 2010. During this period, Portugal’s OFDI annual growth rates were lower than those of comparator economies, such as Spain or Ireland, and only slightly above those of Italy. OFDI flows in the 2001-2010 period were concentrated in the services sector, particularly in real estate, followed by retail and manufacturing. In contrast, there has been a clear decline of investment in financial services (largely explaining the negative figures recorded in 2010) and in the construction industry. Excluding 2010, the Netherlands has attracted a significant share of Portugal’s OFDI. Investment in non-traditional destinations has gained importance in recent years, both in Europe (Romania, Bulgaria) and outside Europe (the United States, India), but their weight remains limited. The crisis affected OFDI policy, leading to growing concern regarding the localization of value-added activities in Portugal. There has been a shift in government policy in the past three years, prioritizing exports over direct investment as a mode of entry into foreign markets.

Kind regards,

Karl P. Sauvant, Ph.D.
Senior Fellow
Vale Columbia Center on Sustainable International Investment
Columbia Law School - Earth Institute
Columbia University
435 West 116th Street, Rm. JGH 638
New York, NY 10027
Ph: (212) 854-0689
Fax: (212) 854-7946

Please visit our website - http://www.vcc.columbia.edu

The Yearbook on International Investment Law and Policy 2010-2011 was released by Oxford University Press in December 2011. For details please see www.vcc.columbia.edu.
The following ebooks are available free of charge from the same website: FDI Perspectives: Issues in International Investment; Inward and Outward FDI Country Profiles; MNEs from Emerging Markets: New Players in the World FDI Market.