FDI flows: trends and risks

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The Economist has analyzed the most recent FDI data from the OECD and praises the increase in flows to emerging markets.

“…FDI is increasingly starting to flow out of the OECD, rather than between its members. Net outflows from the OECD have been rising since 2000, when they actually dipped into negative territory as merger mania hit its frenzied heights. In 2004, the amount of money invested outside the OECD reached its highest levels in over a decade, as rich-world investors sought cheap labour and untapped consumer markets in the developing world.”

However, despite this slight turnaround, capital continues to flow from the developing world to the developed world, increasing global imbalances and risks. Accordingly, many have begun to ring alarms, including Martin Wolf.

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