FDI trends in 2010–2011 and the challenge of investment policies for outward foreign direct investment

Abstract

This chapter begins with a brief discussion of the latest trends in foreign direct investment (FDI). It then turns to an analysis of policies related to outward foreign direct investment and discusses issues that relate to them. It argues that FDI flows have managed to sustain their recovery in the aftermath of the 2008 financial crisis, but considerable uncertainty about prospects over the next few years remains. Emerging markets have strengthened their position in the global FDI landscape in terms of both inward and outward investment. Outward FDI policies can play a vital role in creating an environment that allows domestic firms that have the capability to become multinational enterprises (MNEs) to invest overseas and strengthen their competitiveness. The challenge is to ensure that MNE efficiency and competitiveness gains from outward FDI translate into benefits for the home economies.