The UN's Department of Economic and Social Development yesterday published its annual report on world investment, 350 pages of carefully polished research and policy advice. It points out that foreign direct investment (FDI) is replacing trade as an engine of world growth, with the global sales of foreign affiliates of transnational corporations (so-called TNCs) standing at dollars 4,400bn ( pounds 2,300bn) in 1990 - twice the level of world exports. During the second half of the 1980s, global FDI flows increased twice as fast as domestic investment and two-and-a-half times faster than exports.
Most of this took place in the US, the European Community and Japan. But, the report notes, as developing countries liberalise their trade and investment regimes, FDI is becoming more important for them too. So far, there have been few guidelines to govern this FDI binge. But conflicts between states over rules for foreign investment are on the increase, and the failure of some large TNCs - step forward BCCI and Robert Maxwell's empire - suggests that lack of a regulatory institution may be expensive.
Sir Leon Brittan, the EC's competition commissioner, suggested something along these lines early this year. More than anybody, he knows the difficulty of managing a series of different regimes for competition policy, investment and trade. There is work on the subject going on in the General Agreement on Tariffs and Trade, the World Bank and the Organisation for Economic Co-operation and Development, but no agency to tie them all together. There is some logic to bringing FDI under a UN agency; Gatt and the Bank are associated with the UN.Reuse content