UN World Investment Report 2009
Transnational Corporations, Agricultural Production and Development
Today sees the release of the 2009 World Investment Report, an annual publication from the United Nations which offers the most comprehensive and authoritative study of foreign investment trends.
This year’s Report, which focuses on agricultural production and development, reports that global foreign direct investment (FDI) flows have been severely affected by the worldwide economic and financial crisis.
The crisis has changed the FDI landscape: investments to developing and transition economies surged, increasing their share in global FDI flows to 43% in 2008. This was partly due to a concurrent large decline in FDI flows to developed countries (29%).
Overall policy trends during the crisis have so far been mostly favourable to FDI, both nationally and internationally. However, in some countries a more restrictive FDI approach has emerged.
There is also growing evidence of “covert” protectionism. The New Zealand policy initiative has been facilitating: a recent announcement increased exemptions from the foreign investment approval process and clarified the meaning of strategic assets.
The Report reveals that after decades of slow growth, international business interest and participation in agriculture – including through FDI – is again on the rise. Despite this mounting interest, in most countries only a small share of FDI goes to agriculture.
There are nevertheless some developing countries, including least developed countries (LDCs), where the share of agriculture in inward FDI is relatively important. The renewed interest of foreign investors in agricultural investment is significant enough to raise questions about whether FDI and other forms of multinational business participation in agriculture can contribute to the development of this long-neglected industry.
The World Investment Report recommends that governments adopt an integrated policy approach that takes into account all concerns arising from multinational involvement. This analysis will be of particular interest to New Zealand readers in the light of last week’s announcement by Crafar, New Zealand’s largest privately owned dairy farming operation that it is in talks with a Chinese company to buy its business.