Foreign direct investment in OECD countries fell 20 per cent in 2002, following already steep declines the previous year. Preliminary indications point to a further drop in 2003. A total of USD 490 billion in investment flowed into OECD countries in 2002, down from USD 615 billion in 2001 and about one-third the level recorded in 2000. 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. FDI flows into other OECD countries, taken as a whole, remained about flat in 2002. Based on mergers and acquisitions data for the first five months of the year, OECD countries could be heading for a further drop in FDI in 2003 of 25 to 30 per cent. In contrast, investment flowing out of the 30 OECD member countries showed a more modest decline. Outward FDI hit USD 609 billion in 2002, down from USD 690 the prior year. Developing countries were consequently 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 USD 53 billion...

China has made progress in providing a business conducive to foreign direct investment (FDI). The challenge now is to move towards a more rules-based policy framework that will attract high-quality FDI from OECD countries. The OECD proposes a number of policy options for the Chinese government to consider in further developing such a framework. These include additional streamlining of the investment project approval process, reconsideration of unnecessary sectoral restrictions on foreign investment, and measures to increase transparency and strengthen the rule of law. This article is based on the recent publication China: Progress and Reform Challenges, OECD Investment Policy Review, 2003...

The present article reproduces a report approved in April 2003 by the OECD Committee on International Investment and Multinational Enterprises (CIME). The article comprises two main sections. The first section “Guiding Principles for Policies toward Attracting Foreign Direct Investment” is a statement endorsed by CIME as part of its consideration of incentive-based policies to attract FDI. The second section “Assessing FDI Incentive Policies: A Checklist” was released by CIME with the intention of providing policy makers with a tool against which to assess the usefulness and relevance of FDI incentive policies...

Among OECD countries and beyond a consensus is developing about the importance of public sector transparency. Above all, transparency is an essential ingredient for effective public policy and sustainable growth. In the specific context of international investment, transparency of the rules guiding cross-border transactions, including the provisions laid down in international investment treaties, is of obvious importance for investors. But the issues involved are much broader. The overall level of public sector transparency in host countries – whether linked with the rule of law, procedural fairness, integrity and public involvement in the political process – is recognised as one of the key factors that make investors, foreign and domestic alike, decide where, and whether, to invest. This special focus sheds light on these issues, drawing on the experiences from individual OECD member countries and in the context of international investment instruments...

The IMF and OECD have a well-established interest in foreign direct investment (FDI) statistics. OECD compiles and disseminates detailed FDI statistics for all OECD countries by partner country as well as by industry breakdowns according to a common framework in the International Direct Investment Statistical Yearbook. IMF disseminates the FDI statistics of its member countries as a part of the balance of payments statistics according to standard components. Both organisations moreover publish methodological standards to measure the FDI activity. These guidelines are included in the IMF Balance of Payments Manual, fifth edition (the BPM5) and the OECD Benchmark Definition of Foreign Direct Investment, third edition (the Benchmark Definition). In 2001, the IMF and the OECD conducted, for the second time, a joint survey to assessthe developments in the FDI statistics of their member countries (the first time was in 1997). This article summarises the main findings of the second joint survey...