TENDENCIES OF FOREIGN DIRECT INVESTMENT

Abstract

The paper attempts to provide an analysis of tendencies of foreign direct investment (FDI) activity in developed economies and in Lithuania in 2009-2011. The financial and credit crisis that began in the second half of 2007 has not affected the overall volume of FDI inflows. World FDI flows fell moderately in 2008 following a five-year period of uninterrupted growth. FDI flows to and from developed countries fell sharply in 2008, after reaching a historic peak in 2007. Inflows down by 29 % from the previous year, and these declines occurred in all major host countries except the United States. Since mid-2008, divestments have exceeded gross FDI flows in a number of countries.

After three years of consecutive decline, FDI flows to developed economies, mainly in European countries, grew robustly in 2011, and the rise in FDI was driven by cross-border mergers and acquisitions (M&As). Against a background of continued economic uncertainty, turmoil in financial markets and slow growth, countries worldwide continued to liberalize and promote foreign investment as a means to support economic growth and development.

DOI: http://dx.doi.org/10.5755/j01.em.17.4.2996