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(a) FDI inflows United States United Kingdom France Canada Netherlands China Hong Kong, China Spain Russian Federation Germany Belgium Switzerland Italy (b) FDI outflows United States 233 237 224 United Kingdom France Germany Spain. Italy Japan Canada. Hong Kong, China Luxembourg Switzerland Belgium Russian Federation! Sweden Austria 314 222 266 225 Brazil Austria Irelan Mexico Netherlands Australia Saudi Arabia 2007 2006 British Virgin Islands 2007 2006 Singapore China India Ireland -10 10 30 50 70 90 110 130 150 170 -10 10 30 50 70 90 110 130 150 170 a Source: UNCTAD, World Investment Report 2008: Transnational Corporations and the Infrastructure Challenge, annex table B.1 and based on FDI/TNC database (www.unctad.org/fdistatistics). Ranked by the magnitude of 2007 FDI flows. However, due to the financial and economic crisis, UNNTAD's report indicated that global FDI inflows fell from a historic high of $1,979 billion in 2007 to $1,697 billion in 2008, a decline of 14%. In developed countries, where the financial crisis originated, FDI inflows fell in 2008 by 29% mostly due to cross-border M&A sales that fell by 39% in value after a five-year boom ended in 2007. Whereas in developing countries and the transition economies FDI continued to increase, posting a 17% to $621 billion. By region, FDI inflows increased considerably in Africa (27%) and in Latin America and the Caribbean (13%) in 2008, continuing the upward trend of the preceding years for both regions. In the first half of 2008 developing countries weathered the global financial crisis better than developed countries, as their financial systems were less closely interlinked with the hard-hit banking systems of the United States and Europe. In the face of a global economic recession, tighter credit conditions, falling corporate profits, and gloomy prospects and uncertainties for global economic growth, many companies have announced plans to curtail production, lay off workers, and cut capital expenditures, all of which will tend to reduce FDI in 2008. In developing and transition economies, preliminary estimates suggest that FDI inflows have been more resilient, though the worst impacts of the global 51

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