ABSTRACT

Introduction UNCTAD (2009d) stated in its World Investment Report 2009 that during 2008 the global flows of foreign direct investment (FDI) had been severely affected by the financial and economic crisis and that these developments had changed the FDI landscape because the developing countries and emerging markets had acquired a larger share of worldwide direct investment. According to the same source the global crisis of 2008-2009 had an effect on the components (equity capital, reinvested earnings and intra-company loans) and the modes (greenfield investments and mergers and acquisitions) in which FDI was conducted. The global recession also had repercussions on the activities of private equity funds and the so-called Sovereign Wealth Funds (SWFs) which had ventured into FDI territory. UNCTAD also claimed that the crisis had an adverse impact on the current and future investments of the multinational enterprises (MNEs) and consequently would affect the growth prospects of both the countries of destination (or host countries) and the countries of origin (or home countries). Policy changes by the host and home countries about international trade and investment to cope with the crisis and protect their own economy from the onslaught of the crisis might result in ‘beggar thy neighbour policies’, including investment protectionism and unfair incentives to attract or retain investments (Gurria 2009), that would have a negative influence on the world economy (De Beule and Van Den Bulcke 2010b).