PREFACE .............................................................................................................................................. iii
ACKNOWLEDGEMENTS ....................................................................................................................iv
OVERVIEW.........................................................................................................................................xvii
PART ONE
RECORD FLOWS IN 2007, BUT SET TO DECLINE
CHAPTER I. GLOBAL TRENDS ......................................................................3
A. FDI AND INTERNATIONAL PRODUCTION...............................................................................3
1. Recent trends in FDI ..........................................................................................................................3
a. Overall trends ..............................................................................................................................3
b. Geographical patterns...................................................................................................................7
(i) Developed countries.....................................................................................................................7
(ii) Developing countries....................................................................................................................8
(iii) South-East Europe and CIS..........................................................................................................9
c. Sectoral patterns .............................................................................................................................9
2. International production .....................................................................................................................9
3. Indices of FDI performance and potential .......................................................................................10
4. New developments in FDI policies ..................................................................................................11
a. Developments at the national level ..............................................................................................11
b. Developments at the international level.......................................................................................14
(i) Bilateral investment treaties ..........................................................................................................14
(ii) Double taxation treaties................................................................................................................16
(iii) International investment agreements other than BITs and DTTs ................................................16
(iv) Investor-State dispute settlement.................................................................................................16
(v) Implications of recent developments ............................................................................................17
B. CURRENT FINANCIAL AND MONETARY DEVELOPMENTS AND FDI ...........................18
C. FDI BY SOVEREIGN WEALTH FUNDS.....................................................................................20
1. Characteristics of SWFs...................................................................................................................20
2. Investment patterns ..........................................................................................................................20
3. Growing concerns about SWFs........................................................................................................25
D. THE LARGEST TNCs.....................................................................................................................26
1. The world’s top 100 TNCs...............................................................................................................26
2. The top 100 TNCs from developing economies ..............................................................................29
PROSPECTS ...................................................................................................................................32
CHAPTER II. REGIONAL TRENDS ............................................................ …37
INTRODUCTION..................................................................................................................................37
A. DEVELOPING COUNTRIES ........................................................................................................38
1. Africa...............................................................................................................................................38
a. Geographical trends....................................................................................................................38
(ii) Outward FDI: mainly driven by South Africa............................................................................42

b. Sectoral trends: a rise of inflows to services ..............................................................................42
c. Policy developments...................................................................................................................43
d. Prospects: commodity prices boost FDI.....................................................................................46
2. South, East, South-East Asia and Oceania .......................................................................................46
a. Geographical trends....................................................................................................................47
(i) Inward FDI: widespread increases .............................................................................................47
(ii) Outward FDI: growth led by services and extractive industries ................................................49
b. Sectoral trends: rising flows to all sectors..................................................................................50
c. Policy developments...................................................................................................................51
d. Prospects: remaining promising .................................................................................................53
3. West Asia.........................................................................................................................................53
a. Geographical trends....................................................................................................................53
(i) Inward FDI: a sustained increase ...............................................................................................53
(ii) Outward FDI soared ...................................................................................................................55
b. Sectoral trends: strong focus on services....................................................................................56
c. Policy developments...................................................................................................................57
d. Prospects: FDI set to remain stable ............................................................................................58
4. Latin America and the Caribbean.....................................................................................................58
a. Geographical trends......................................................................................................................58
(i) Inward FDI surged mainly in South America ............................................................................58
b. Sectoral trends: growth led by primary and natural-resource-based activities...........................60
c. Policy developments...................................................................................................................63
d. Prospects: growth of inflows and outflows ................................................................................65
B. SOUTH-EAST EUROPE AND THE COMMONWEALTH OF INDEPENDENT STATES ...66
1. Geographical trends .........................................................................................................................66
a. Inward FDI: growing market-seeking FDI.................................................................................66
b. Outward FDI: Russian TNCs expanding abroad........................................................................68
2. Sectoral trends: services dominate. ..................................................................................................69
3. Policy developments ........................................................................................................................70
4. Prospects: natural resources will continue to attract FDI.................................................................71
C. DEVELOPED COUNTRIES ..........................................................................................................72
1. Geographical trends .........................................................................................................................72
a. Inward FDI: more vibrant in the EU ..........................................................................................72
b. Outward FDI: strong net outward investments ..........................................................................75
3. Policy developments ........................................................................................................................77
4. Prospects: FDI growth likely to decline in the short term ..............................................................78
PART TWO
TRANSNATIONAL CORPORATIONS AND
THE INFRASTRUCTURE CHALLENGE
INTRODUCTION...............................................................................................85
CHAPTER III. TNCs IN INFRASTRUCTURE INDUSTRIES ...........................87
A. MAIN FEATURES OF INFRASTRUCTURE INDUSTRIES
AND EMERGING ISSUES.............................................................................................................87
1. Characteristics of infrastructure industries ......................................................................................87
2. The infrastructure investment gap in developing countries .............................................................92
3. The role of the State and other players in infrastructure industries .................................................94
B. TNC INVOLVEMENT IN INFRASTRUCTURE INDUSTRIES ...............................................97
1. Global trends ...................................................................................................................................99

C. INTERNATIONAL INVESTMENT AGREEMENTS AND INVESTMENT DISPUTES .....162
1. The role of international investment agreements ...........................................................................162
2. Infrastructure-related investment disputes .....................................................................................164
a. Many investment disputes are related to infrastructure............................................................164
b. Recent arbitral decisions on core IIA provisions......................................................................165
(i) Fair and equitable treatment .....................................................................................................166
(ii) Expropriation...........................................................................................................................166
(iii) Umbrella clause........................................................................................................................167
3. Conclusions and implications .......................................................................................................168
D. THE ROLE OF HOME COUNTRIES AND INTERNATIONAL INSTITUTIONS ..............169
2. Risk-mitigating measures ..............................................................................................................171
a. Coverage for political risk ........................................................................................................172
b. Coverage for credit risk ............................................................................................................174
c. Coverage for currency risk .......................................................................................................174
3. Capacity-building measures ...........................................................................................................175
4. Promoting regional infrastructure projects.....................................................................................176
E. CONCLUSIONS............................................................................................................................176
REFERENCES................................................................................................183
ANNEXES.......................................................................................................197
SELECTED UNCTAD PUBLICATIONS ON TNCs AND FDI .........................289
QUESTIONNAIRE...........................................................................................293