The second Vi videoconference organized for core member, the Belarus State Economic University (BSEU), conducted on February 18, gave 25 students and lecturers the opportunity to discuss global and regional foreign direct investment (FDI) trends with Kalman Kalotay, of UNCTAD’s Division on Investment and Enterprise. The videoconference was once again hosted by the United Nations Development Programme office in Minsk.

“Global FDI fell by 18 percent – to about USD 1.3 trillion – in 2012,” Kalotay reported. “Developed countries were mainly responsible for this decline, as the global economic recovery takes longer than expected."

With USD 680 billion, “developing countries surpassed developed countries in FDI inflows for the first time since 1971, when UNCTAD started recording FDI data," he added.

The evolution of FDI inflows was not uniform across regions. While Latin America and the Caribbean registered positive growth in 2012, inflows to China declined slightly and developing Asia lost 9.5 percent. The rise was strongest in South America due to the sub-region's economic buoyancy, leading to a significant number of market-seeking investments, Kalotay explained.

After a strong recovery in 2011, flows to transition economies remained flat in 2012, with a slight decline in Russia, he told the Belarusian audience.

"CIS economies benefit from natural-resource-seeking FDI, while South-East Europe attracts manufacturing FDI," he explained, citing WIR results that found 85 percent of regional inflows concentrated in Russia, Kazakhstan, Ukraine, Belarus and Turkmenistan. 

Given a more investor-friendly business environment in the region, new privatization programmes, Russia’s accession to the WTO, and the rise in investments from other developing countries, "FDI flows to the region are expected to continue to grow in the medium term," he concluded.

The subsequent discussion raised issues related to the comparison of privatization and other forms of FDI, ways of measuring FDI, the sustainability of current FDI trends at a global level, and the challenges and opportunities for FDI in the region in general, and in relation to the WTO membership of the countries of the region, and of  Russia in particular.