Skip to main content Accessibility help
×
Home
  • Print publication year: 2003
  • Online publication date: September 2009

9 - East Asia and options for negotiations on investment

Summary

Global flows of foreign direct investment (FDI) continued to rise throughout the 1990s, maintaining their momentum despite the onset of the East Asian financial and economic crisis in mid-1997. According to UNCTAD data, global FDI inflows rose by 44 percent in 1998, to $680 billion, and by 27 percent in 1999, to $865 billion (figure 9.1). FDI flows to developing countries declined by 4 percent in 1998, the first decline since 1985, mainly owing to the sharp economic slowdown in East Asia. The decline of FDI flows to developing countries was more than offset by a rise in cross-border merger and acquisition (M&A) activity in developed countries. The 1998 rise in global FDI flows occurred despite a largely unfavorable backdrop: a decline in world economic growth from 3.4 percent in 1997 to 2 percent, a parallel contraction in world trade (in value terms), and major financial crises in East Asia, Russia, and parts of Latin America.

In the pre-crisis period (1993–1996), East Asia received around 24 percent of global FDI inflows each year (table 9.1). However, it saw a 7 percent decline in FDI inflows between 1997 and 1998, from $94 billion to $87 billion, the first drop since the mid-1980s. The decline was attributed to sharp falls in FDI inflows for Indonesia and Taiwan, and caused the region's share of the global FDI stock to fall to 16.1 percent in 1999 (table 9.2).

Related content

Powered by UNSILO
REFERENCES
Association of Southeast Asian Nations Secretariat (1998), Handbook of Investment Agreements in Association of Southeast Asian Nations, Jakarta
Bergsman, J. and Bora, B. (2000), “Foreign direct investment and the East Asian financial crises”, United Nations Conference on Trade and Development and World Bank, presented at the World Bank Seminar on the Financial Crises, September 1999, Bali, mimeo
Bora, B. (2001), “The agreement on trade related investment measures: 1995– 2001”, United Nations Conference on Trade and Development Study Series on Policy Issues in International Trade and Commodities 17, Geneva: UNCTAD
Bora, B. and Neufeld, I. N. (2000), “Tariffs and the East Asian financial crises”, United Nations Conference on Trade and Development Study Series on Policy Issues in International Trade and Commodities 13, Geneva: UNCTAD
Bora, B., Chia Sia Yue, Freeman, N., and Urata, S. (1999), “Investment policy options in East Asia”, paper presented at the Pacific Economic Cooperation Council-World Bank Trade Policy Forum, Manila
Pacific Economic Cooperation Council (Pacific Economic Cooperation Council) (1995), Survey of Impediments to Trade and Investment in the Asia-Pacific Economic Cooperation Region, Singapore: Asia-Pacific Economic Cooperation Secretariat
United Nations Conference on Trade and Development (United Nations Conference on Trade and Development) (1998), World Investment Report: Trends and Determinants, New York: United Nations
United Nations Conference on Trade and Development (United Nations Conference on Trade and Development) (1999a), “Foreign direct investment into developing Asia has weathered the storm”, press release, TAD/INF/2803, April 27 at www.unctad.org/en/press/pr2803en.htm
United Nations Conference on Trade and Development (United Nations Conference on Trade and Development) (1999b), “Global foreign investment boomed in 1998, fuelled by mergers and acquisitions in developed countries”, press release, TAD/INF/2810, June 22 at www.unctad.org/en/press/pr2810en.htm
United Nations Conference on Trade and Development (United Nations Conference on Trade and Development) (2000a), Mergers and Acquisitions, New York: United Nations
United Nations Conference on Trade and Development (United Nations Conference on Trade and Development) (2000b), World Investment Report: Trends and Determinants, New York: United Nations