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World Investment Report 1998

Trends and Determinants

image of World Investment Report 1998

Prepared by the United Nations Conference on Trade and Development (UNCTAD), the World Investment Report 1998 (WIR98) provides an analysis of current trends at the global and regional levels in Foreign Direct Investment (FDI) and international production by transnational corporations (TNCs). It discusses specific issues related to the role and impact of FDI in various parts of the world, including, among others, the implications of the recent financial crisis in Asia for FDI, in and by, the affected countries and other economies. The Report also reviews the locational determinants of flows of FDI to host countries and examines the evolving nature of those determinants as TNCs adjust their strategies to the changing global economic environment and increased competitive pressures.

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Central and Eastern Europe

The basic FDI trend in Central and Eastern Europe resumed its upward growth in 1997 after a decline in 1996. The trend was uneven, with twelve countries showing growth and five showing declines, with neither group homogenous in terms of progress in transition. With the exception of the Russian Federation, most of the FDI growth occurred in the secondary and tertiary sectors. The Russian Federation emerged as the leader in attracting FDI for the first time, mainly on account of the interest of investors in its natural resources and its infrastructure potential in basic telecommunications. The relation between FDI growth and GDP growth continued to be weak, with causal links apparently extending both ways in different circumstances. Finally, outward FDI from Central and Eastern Europe showed significant growth, with the Russian Federation again taking the lead, but outward FDI stocks remained very low in comparison with inward stocks.

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