Jan 29th 2009 - From The Economist print edition
Foreign direct investment (FDI)—the purchase of factories, offices and other assets by foreign companies—shrank by more than a fifth last year, according to new estimates from UNCTAD. The factors that led firms to cut back capital spending at home, such as scarce credit, weak profits and uncertainty about demand, also hurt cross-border investment. The worst-hit countries were rich ones, particularly in Europe. FDI into Britain and Germany was around a half of its 2007 level. In Italy it fell by 94%. Flows into the United States, the biggest recipient of FDI, held up rather better. Big emerging markets, such as Brazil, China, India and Russia, saw FDI increase last year but may be in for a rocky 2009.