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World Investment Report 2007   

World Investment Report 2007

Transnational Corporations, Extractive Industries and Development

UNITED NATIONS

The work is published for and on behalf of the United Nations.

Paperback Book (6½" x 9½")  :   Pages : 322
2008  Edition   :   ISBN - 81-7188-674-4
Price : Rs. 995.00 (For Sale in South Asia Only)
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ABOUT THE BOOK :

 

World Investment Report 2007 (WIR07) is the seventeenth in a series published by the United Nations Conference on Trade and Development (UNCTAD). The Report analyses the latest trends in foreign direct investment (FDI) and puts a special focus in 2007 on the role of transnational corporations (TNCs) in the extraction of oil, gas, and metal minerals.

Higher prices for many minerals have led to renewed investor interest in the extractive industries. TNCs—including some of the world´s largest corporations—play a key role in the mining of metals and in the extraction of oil and gas. Privately owned TNCs dominate the harvesting of metal minerals, while State-owned companies from developing and transition economies are key players in oil and gas. Many such State-owned firms are emerging as TNCs in their own right.

Drawing on unique data, the Report examines TNC involvement in the extraction of mineral resources and maps the key countries and companies. It also discusses how the forces driving investment change as raw materials progress up the "value chain" to become finished products, and as different types of companies participate. In view of recent discussion of the so-called "resource curse," the Report explores how the participation of TNCs may help or hinder long-term, broad-based economic development in developing countries -- the best approach for reducing poverty and raising living standards. It considers how energy and mineral extraction can help governments achieve such aims.

As in previous years, WIR07 presents the latest data on FDI and traces global and regional trends in FDI and in international production by TNCs. Global FDI inflows rose in 2006 for the third consecutive year. This growth was shared by all major country groups: developed countries, developing countries and the transition-economies of South-East Europe and the Commonwealth of Independent States. Rising demand for commodities was reflected in a steep increase in natural resource-related FDI, although the services sector continued to be the dominant recipient of FDI. Among the developing regions, FDI inflows to subregions such as North Africa, sub-Saharan Africa, West Asia, South Asia, East Asia, and South-East Asia were at record levels, as were foreign investment flows to transition economies.

   
 
   
  CONTENTS IN DETAIL:    
 
   
 

PREFACE

ACKNOWLEDGEMENTS

OVERVIEW

   
 

PART ONE
WIDESPREAD GROWTH IN FDI

CHAPTER I. GLOBAL TRENDS: SUSTAINED GROWTH IN FDI FLOWS

A. FDI AND INTERNATIONAL PRODUCTION

1. Trends in FDI

a. Overall trends

b. Continued rise in cross-border M&As

c. FDI by private equity funds

2. International production

3. Indices of inward FDI performance and potential

4. Developments in FDI policies

a. Developments at the national level

b. Developments at the international level

B. CHANGING PATTERNS OF FDI

1. Geographic patterns

2. Sectoral and industrial distribution of FDI

C. THE LARGEST TNCs

1. The world’s 100 largest TNCs

2. The 100 largest TNCs from developing economies

3. Transnationality of the largest TNCs

4. The world’s 50 largest financial TNCs

D. PROSPECTS

NOTES

CHAPTER II. REGIONAL TRENDS

INTRODUCTION

A. DEVELOPING COUNTRIES

1. Africa34

a. Geographical trends

(i) Inward FDI: natural resources drove the surge

(ii) Outward FDI hit new heights

b. Sectoral trends: primary sector’s share rose

c. Policy developments

d. Prospects: moderate growth expected in 2007

2. Asia and Oceania

a. South, East and South-East Asia

(i) Geographical trends

(a) Inward FDI: continued shift in favour of South and South-East Asia

(b) Outward FDI increased substantially from all subregions

(ii) Sectoral trends

(a) Inward FDI increased in primary and services sectors

(b) Outward FDI: resource-seeking FDI continued to rise

(iii) Policy developments

(iv) Prospects: most-favoured region for FDI

b. West Asia

(i) Geographical trends

(a) Inward FDI maintained its upward trend

(b) Outward FDI increased slightly

(ii) Sectoral trends: all sectors attracted higher flows

(iii) Policy developments

(iv) Prospects: upward trend should continue

c. Oceania

3. Latin America and the Caribbean

a. Geographical trends

(i) Inward FDI remained stable

(ii) Outward FDI soared

b. Sectoral trends

(i) Primary sector: modest decline in inflows but foreign investors’ interest remains strong

(ii) Manufacturing continued to attract the largest inflows

(iii) Modest increase of FDI in services

c. Policy developments

d. Prospects: moderate growth of inflows, reduced outflows

B. SOUTH-EAST EUROPE AND THE COMMONWEALTH OF INDEPENDENT STATES

1. Geographical trends

a. Inward FDI surged

b. Outward FDI growth was sustained

2. Sectoral trends: FDI in services was buoyant

3. Policy developments

4. Prospects: brighter for larger economies and new EU members

C. DEVELOPED COUNTRIES

1. Geographical trends

a. Inward FDI grew in all regions and all sectors

b. Outward FDI increased sharply

2. Sectoral trends: services continued to dominate

3. Policy developments

4. Prospects: optimism for further growth in FDI

NOTES

 

PART TWO
TRANSNATIONAL CORPORATIONS,
EXTRACTIVE INDUSTRIES AND DEVELOPMENT

INTRODUCTION

CHAPTER III. FEATURES OF THE EXTRACTIVE INDUSTRIES

A. EXTRACTIVE INDUSTRIES IN THE WORLD ECONOMY

1. Minerals are essential for all economies

2. Geography of production and consumption of selected minerals

B. THE COMMODITY PRICE BOOM AND ITS IMPACT ON INVESTMENTS

1. Booms and busts of mineral prices

2. The boom led to rising profits and investments

3. Prices likely to remain high for some time

C. EXTRACTIVE INDUSTRIES: OPPORTUNITIES AND CHALLENGES FOR DEVELOPMENT

1. Characteristics of investments in extractive industries

2. Public policy concerns of mineral-rich countries

a. Mineral endowments represent development opportunities

b. The economic challenge

c. The environmental, social and political challenges

d. The governance challenge

NOTES

CHAPTER IV. TNCs IN EXTRACTIVE INDUSTRIES

A. GLOBAL TRENDS IN FDI AND OTHER FORMS OF TNC PARTICIPATION IN EXTRACTIVE INDUSTRIES

1. FDI trends

2. Developing and transition economies are receiving a growing share of foreign investment

B. THE CHANGING UNIVERSE OF TNCs IN EXTRACTIVE INDUSTRIES

1. TNCs in the metal mining industry

a. Continued dominance of private firms

b. Varying degrees of internationalization

2. TNCs in oil and gas

a. The Seven Sisters have given way to State-owned companies

b. TNCs from developing and transition economies are expanding overseas

C. DRIVERS AND DETERMINANTS

1. Motivations for internationalization

2. Determinants of TNC activity

a. Ownership-specific advantages

b. Internalization advantages

c. Locational advantages

D. CONCLUSIONS

NOTES

CHAPTER V. DEVELOPMENT IMPLICATIONS FOR HOST COUNTRIES.129

A. A FRAMEWORK FOR ASSESSING IMPLICATIONS FOR HOST COUNTRIES OF TNC INVOLVEMENT IN EXTRACTIVE INDUSTRIES

B. ECONOMIC IMPACT

1. Direct economic effects

a. Financial contributions

b. Technology contributions

c. Employment impacts

d. Enhancement of exports

e. Generation of government revenue

2. Indirect economic effects

a. Linkages

b. Infrastructure development

3. Overall impact: implications for macroeconomic performance

C. ENVIRONMENTAL IMPACT

D. SOCIAL AND POLITICAL IMPACTS

1. Health and safety impacts

2. Social impacts on the local community

3. Human rights implications

4. Corruption, conflict and other political issues

E. CONCLUSIONS

NOTES

CHAPTER VI. THE POLICY CHALLENGE

A. THE BROADER GOVERNMENT POLICY AND INSTITUTIONAL FRAMEWORK

B. REGULATING THE ENTRY AND OPERATIONS OF TNCs IN EXTRACTIVE INDUSTRIES

1. Oil and gas: from “old-style” concessions to partnership agreements

2. Codes and mining agreements governing FDI in metal mining

C. ARRANGEMENTS FOR RENT-SHARING

1. Recent policy changes

2. Implications of recent policy changes

3. Is progressive taxation a solution?

D. POLICIES FOR BROADER ECONOMIC BENEFITS

1. Promoting linkages

2. Promoting skills and technology development

E. COPING WITH ENVIRONMENTAL CHALLENGES

F. ADDRESSING SOCIAL AND POLITICAL CONCERNS

1. Labour-related concerns

2. Local community concerns

3. Human rights

4. Enhancing transparency

5. Dealing with extractive-industry TNC investments in conflict situations

G. CONCLUSIONS

NOTES

ANNEX TO CHAPTER VI. TECHNICAL ASSISTANCE WITH EXTRACTIVE INDUSTRIES: SELECTED EXAMPLES

REFERENCES

ANNEXES

SELECTED UNCTAD PUBLICATIONS ON TNCs AND FDI

QUESTIONNAIRE