19/06/2003 - Foreign direct investment in OECD countries fell 20% in 2002, following already steep declines the previous year. Preliminary indications point to a further drop in 2003, according to a new report.

A total of $490 billion in investment flowed into OECD countries in 2002, down from $615 billion in 2001 and about one-third the level recorded in 2000, says the report,Trends and Recent Developments in Foreign Direct Investment. The continued global economic slump, relatively weak stock markets, uncertainties over international security, and heavy debt loads in once-booming sectors like telecommunications all contributed to the decline.

The drop was concentrated mainly in the United States and the United Kingdom. In the U.S., FDI fell to $30 billion in 2002, from $131 billion the prior year. In the U.K. it declined to $25 billion, down from $62 billion in 2001. FDI flows into other OECD countries, taken as a whole, remained about flat in 2002.

If the downward trend of mergers and acquisitions in the first five months of the year continues, OECD countries could be heading for a further drop in FDI in 2003 of 25% to 30%, says the report.

In contrast, investment flowing out of the 30 OECD member countries showed a more modest decline. Outward FDI hit $609 billion in 2002, down from $690 the prior year. Developing countries were major beneficiaries of net outflows from OECD countries. For the first time ever, China became the world's largest recipient of FDI in 2002 with total inflows of US$ 53 billion.

The report will be included as a chapter in the upcoming annual publication OECD International Investment Perspectives, scheduled to appear in September.

Journalists who would like a copy of the report are invited to contact the Media Relations Division . For further information about the report, journalists can contact Ayse Bertrand, International Investments and Multinational Enterprises Division (tel. 33 1 45 24 91 24).