World foreign direct investment flows fell moderately in 2008 following a five-year period of uninterrupted growth, in large part as a result of the global economic and financial crisis.
While developed economies were initially those most affected, the decline has now spread to developing countries, with inward investment in most countries falling in 2009 too. The decline poses challenges for many developing countries, as FDI has become their largest source of external financing. The impact is analysed in detail in the first part of this his year’s World Investment Report.
The Report also examines the role that transnational corporations (TNCs) play, and can play, in agricultural production in developing countries. There is renewed and growing interest in this sector, provoked in part by the recent food crisis and concerns about food security. The Report looks at this trend – including the rise of South-South investment – and at specific cases of host countries and industries in which TNCs are active in a meaningful way.
As the Report underscores, efforts to boost investment and agricultural productivity through TNC involvement require an integrated policy approach by governments that takes many considerations into account: the economic implications as well as environmental and social concerns, including those related to land degradation, land tenure rights, food security and the right to food, and the protection of indigenous people and other minorities.
Greater involvement by TNCs will not automatically lead to greater productivity in agriculture, rural development or the alleviation of poverty and hunger. However, with the right policies in place, it can be used to bring about such gains, in particular by strengthening the capacities of local farmers. A concerted effort is required by all development partners to support and equip host-country governments, farmers, cooperatives and others to maximize the development benefits of TNC involvement. This timely Report provides useful analysis and insights for all stakeholders involved in working towards that vital end.

By: United Nations Conference on Trade and Development (UNCTAD)

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