UN Report: Southeast Europe Sees Growth in Foreign Investment

03/10/2005

Bulgaria and Romania accounted for more than 70 per cent of the foreign direct investment inflows to Southeast Europe in 2004, a new UN report says.

(RFE/RL, UPI, Sofia News Agency, United Nations Conference on Trade and Development, UN News Centre - 29/09/05)

The UN's annual World Investment Report is considered the most comprehensive indicator of foreign direct investment worldwide. [UN]

Global foreign direct investment (FDI) inflows rose modestly in 2004, a new UN report says. At $648 billion, they were 2 per cent higher than in 2003, according to the World Investment Report (WIR), published Thursday (29 September) by the United Nations Conference on Trade and Development (UNCTAD).

"After three years of gradual decline, foreign direct investment is picking up again," Georg Kell, executive head of UN Secretary General Kofi Annan's Global Compact initiative, told reporters. "The increase is due exclusively to a significant increase of foreign direct investment flows to developing countries."

The United States was the largest recipient in 2004, followed by Britain, China and Luxembourg, the top FDI recipients in 2003.

In 2004, the year on year increase of flows to developing countries was 36 per cent, standing at over $230 billion. FDI flows to the seven SEE countries -- Albania, Bosnia and Herzegovina (BiH), Bulgaria, Croatia, Macedonia, Romania and Serbia-Montenegro -- totalled nearly $11 billion.

Bulgaria and Romania, which are expected to join the EU in 2007, were the main recipients of inward FDI in 2004 with $2.488 billion and $5.174 billion, respectively, accounting for 71 per cent of the FDI flows to the seven SEE countries. Only Croatia, with $1.076 billion, and Serbia-Montenegro, with $966m, received less FDI in 2004 than they did in the previous year. BiH and Macedonia registered inflows of $497m and $151m, respectively, while Albania received an estimated $426m.

"In Bulgaria and Romania, the prospect of joining the EU in 2007 is prompting rapid adoption of the EU's acquis communautaire, increased efforts towards improving the business environment and the completion of large privatisation deals," the WIR said, noting that other SEE countries are following them in varying degrees. The report forecasts that FDI flows to the SEE and the CIS countries will grow further in 2005 and 2006.

The WIR 2005 also ranks 140 countries in the world by an inward FDI performance index for 2004 -- a moving average, using data for a three-year period. Bulgaria ranks highest, in 12th position. Croatia and Romania are 33rd and 35th, respectively. Albania is 42nd and Macedonia is 72nd. BiH and Serbia-Montenegro are not included in the rankings.