By  on October 23, 2007

GENEVA — Global foreign direct investment is projected to remain at high levels this year and increase in 2008, especially in emerging Asian countries, a United Nations report said.

In 2006, global FDI to host nations increased 38 percent to $1.3 trillion, the second-highest level since the record $1.4 trillion in 2000, driven by increases in cross-border mergers and acquisitions, higher stock prices and reinvested earnings, according to the study from the U.N. Conference on Trade and Development.

Supachai Panitchpakdi, secretary general of the agency, told reporters he expects "a continuation" of the strong growth in FDI, but at a slower pace compared with last year because of uncertainties in financial markets.

The U.N. group's chief for investment analysis, Anne Miroux, said the agency anticipates an increase in FDI in developing countries, especially in Asia. The report said this growth is "underpinned by the strong performance of China and India."

Mergers and acquisitions in Asia's textiles, apparel and leather industries were valued at $1.7 billion in 2006, compared with $100 million the previous year, and accounted for almost half of the global value of M&As of $3.5 billion.

However, the attractiveness of investing in the dynamic Asian region is problematic for other textile and apparel producing countries and regions.

For example, the "World Investment Report, 2007" highlights that the maquila apparel industry in Central America and the Caribbean has suffered a significant decline in exports to the U.S. In 2006, Mexican maquila apparel export shipments to the U.S. declined 13 percent and those to the Central American Free Trade Agreement countries contracted 7 percent.

Haiti and Nicaragua were the only countries in the region last year that posted gains in apparel exports of 11 percent and 23 percent, respectively, the U.N. report said. Mexico's share of total apparel exports to the U.S. fell to 7.4 percent last year from 8.8 percent in 2005 and that of CAFTA countries fell to 12.5 percent from 14 percent. In contrast, China's share increased to 25.9 percent from 22 percent.

FDI in rich industrialized countries last year increased 45 percent to $857 billion, with the U.S. the world's top destination with $175 billion, up from $101 billion a year earlier, followed by the U.K. with $139.5 billion and France with $81 billion.FDI in developing countries reached a record $379 billion, up 21 percent over 2005, with China and Hong Kong the biggest recipients. FDI in China fell for the first time in seven years — by 4 percent to $69 billion, primarily because of a fall in investments in financial services.

India, Asia's second-largest emerging market, increased FDI to $16.8 billion, versus $6.6 billion in 2005.

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