Foreign Direct Investment Prospects for Multinational Companies

Abstract

Foreign Direct Investment (FDI) is a fascinating phenomenon. However its importance is widely underestimated. Let me give you some figures. The current level of FDI as a stock can be estimated to be roughly one trillion dollars. At present, this stock is growing rapidly. It could at its present rate of expansion double every three to four years in absolute size. If the assumption is made that this stock of foreign investment supports a turnover which is two to three times larger — which is the average ratio for industry — one arrives at a turnover figure which is close to the total value of world trade. Everybody recognizes the overwhelming importance of world trade for economic life. The awareness of the importance of world direct foreign investment for our economies seems much less, however. This, despite the fact that FDI often have a deeper and longer lasting impact on economies than trade transactions.