EU Foreign Ministers Approve Commission's Strategy for Partnership with China
Economists and governments agree these days on the crucial importance of foreign direct investment. They see it both as the global market's "seal of approval" on a country's policies and prospects, and as a force, especially in developing countries, for far-reaching economic change. This consensus is surprising when you remember that FDI remains politically sensitive in many poor, and some not-so-poor, countries. But the benefits are so great that reservations on this account have been put aside. The point about FDI is that it is far more than mere "capital": it is a uniquely potent bundle of capital, contacts, and managerial and technological knowledge. It is the cutting edge of globalization.
The outlook for FDI-in total, and country by country- is therefore a matter of great interest. Forecasting it, however, is far from easy. The determinants are complicated, and not always susceptible to measurement. Up to now, so far as this column is aware, detailed forecasts have not been attempted. In a report published this week, the Economist Intelligence Unit, a sister company of The Economist, has ventured into this uncharted territory. It provides a forecast for FDI extending to 2005 for no fewer than 60 countries (accounting for virtually all of the world's actual and projected flows of FDI).
The main difficulty arises from the fact that FDI depends closely on what the EIU calls the business environment-a necessarily broad term that includes, on the firm's definition, 70 separate indicators. Some of these are political, and to the extent that they can be measured at all have to be gauged through surveys that ask investors questions such as, "is the quality of the bureaucracy and its ability to carry out government policy very high, high, moderate, low or very low?" It is one thing to compile this kind of evidence into a backward-looking aggregate which can then be tested for its ability to explain past movements in FDI. It is quite another to use it for forecasting—because to do that the researcher has to predict how political and other conditions will change.
There is no alternative but to blend together different kinds of information. First, take whatever evidence econometrics can yield about the way the forces driving FDI-size of host-country market, expected growth, input costs, geography and natural resources, and the policy framework-have worked in the past. Next, add conventional forecasts of relevant economic aggregates. Third, unavoidably, make more qualitative and speculative assessments of changes in other, "non-economic", conditions. All this the study tries to do. It is academically impure, because it has to be. But the workings and the supporting information are in plain view, and the results are very interesting.
Global FDI flows are projected to shrink markedly this year, from $1 .1 trillion in 2000 to less than $800 billion. Almost all of the reduction is forecast to be in FDI to rich countries, driven by the slowdown in America and by the diminishing pace of mergers and acquisitions (which are a principal driver of FDI in the developed economies). FDI to poor countries merely pauses, at around $220 billion. In subsequent years, flows recover across the board, but growth in flows to poor countries continues to outpace, modestly, growth in flows to rich ones. As a result, the developing countries' share of global FDI inflows rises slightly, to 29%, by 2005. By then, the global stock of FDI will have risen to more than $10 trillion, according to the report, from less than $6 trillion last year.
The United States, unsurprisingly, is expected to dominate the rankings in 2001-2005, much as it does today, accounting for more than 25% of global inflows. The analysis shows that America's business environment is about as good as one would infer, statistically speaking, from its income. Britain, in contrast, is one of 14 countries with a somewhat better business environment than its income would lead you to expect (or, to put it less kindly, with a lower income than its business environment would lead you to expect). Britain is expected to remain the world's second-biggest recipient of FDI, accounting for more than 9% of the total in 2001-2005. In terms of FDI per head, Britain currently ranks seventh, behind (in descending order) Ireland, Belgium, Hong Kong SAR, Sweden, Singapore and the Netherlands. On this measure, the United States ranks fourteenth.
The study's most encouraging finding is that scores for business environment are rising almost everywhere. FDI is a competitive undertaking, but not a zero-sum game: rising scores for business environment drive the totals higher. Comparing 2001-2005 with 1996-2000, the EIU marks down only two economies, Hong Kong SAR and Malaysia, and in neither case by enough to alter the overall assessment-"very good" for Hong Kong SAR and "good" for Malaysia. Thailand, Poland, Hungary and Mexico are among those expected to move in the other direction, from "moderate" to "good"; likewise Germany, Denmark and France, from "good" to "very good".
If all goes well, the process may entrench itself, with FDI fuelling improvements in business conditions, and improving conditions spurring additional FDI. The report scotches the view that the world is anywhere near a natural ceiling on FDI: the scope for further investment is increased, rather than diminished, by the trends it describes and predicts. If the EIU is right, globalization is continuing to gather momentum, and has much further yet to run.
Reading aids and expressions:
1.cutting edge
the newest and most exciting stage in the development of something 前沿，e.g.
1）Settlement houses and settlement house workers were at the cutting edge of social change.娱乐、教育和社会中心及其工作人员处于社会变革的前沿。
2）Although applied research in many university departments may not be at the cutting edge of science and technology, it can make a real contribution to local and regional economies.尽管许多大学院系中的应用研究可能并不处于科技领域的领先地位，但它可以对当地或地区经济作出实际的贡献。
2. The main difficulty arises from the fact that FDI depends closely on what the EIU calls the business environment – a necessarily broad term that includes, on the firm's definition, 70 separate indicators.
在此句中
1）The main difficulty arises from the fact 是主句
2）that FDI depends closely on …70 separate indicators 是同位语从句，说明"fact"的内容，其中：
（1）what the EIU calls the business environment 是宾语从句，作短语动词"depends on"的宾语
（2）a necessarily broad term that includes, on the firm's definition, 70 separate indicators 是同位语，说明"business environment"的内容，其中的"that includes, on the firm's definition, 70 separate indicators"作定语，修饰名词"term"
3. Some of these are political, and to the extent that they can be measured at all have to be gauged through surveys that ask investors questions such as, "Is the quality of the bureaucracy and its ability to carry out government policy very high, high, moderate, low or very low?"
这是个并列复合句，在此句中：
1）Some of these are political 是个并列分句
2）(some of these) to the extent that they can … very low?"是另一个并列分句，它是个复合句，其中：
（1）to the extent that they can be measured at all 是个介词短语，作程度状语，修饰动词"have to be gauged"，其中的"that they can be measured at all"是个限制性定语从句，修饰名词"extent"，引导词"that"相当于介词短语"to which"；
（2）through surveys that ask investors … low or very low 是另一个介词短语，作方式状语，修饰动词"have to be gauged"，其中的"that ask investors …very low?"是个限制性定语从句，修饰名词"survey"
（3） "Is the quality of …low or very low?" 作为一个整体，作介词"as"的宾语
4. It is quite another to use it for forecasting – because to do that the researcher has to predict how political and other conditions will change.
在此句中：
1）It is quite another to use it for forecasting 是主句
2）because to do that … will change 是个原因状语从句，修饰主句中的系表结构，其中：
（1）how political and other conditions will change 是宾语从句，作动词"predict"的宾语
（2）动词不定式"to do that"作目的状语
5. First, take whatever evidence econometrics can yield about the way the forces driving FDI - size of host-country market, expected growth, input costs, geography and natural resources, and the policy framework - have worked in the past.
这句是个祈使句，在此句中：
1）whatever evidence … in the past 是宾语从句，作"take"的宾语；其中：
the forces driving FDI – size of host-country market, expected growth, input costs, geography and natural resources, and the policy framework - have worked in the past 是个省略了关系代词"(in) which"的定语从句，修饰名词"way"，其中的"size of host-country …policy framework"作同位语，说明"forces"的内容
6. in plain view
if something is in plain view, it is easy to see or notice 看得见，e.g.
1）Don't leave your valuables in plain view.不要把你值钱的东西留在人人都看得见的地方。
2）From the position on the hillside, every detail of the landscape was clearly in view.我们从山坡上往下看，风光景色历历在目。
7. Almost all of the reduction is forecast to be in FDI to rich countries, driven by the slowdown in America and by the diminishing pace of mergers and acquisitions (which are a principal driver of FDI in the developed economies).
1）在此句中，句子采用的是被动结构"Almost all of the reduction is forecast"
2）动词不定式"to be in FDI to rich countries"作主语"Almost all of the reduction"的补足语
3）driven by the s．．．and acquisitions 是过去分词短语，作定语，修饰名词"reduction"
4）限制性定语从句"which are a principal … economies"修饰名词"mergers and acquisitions"
8. a zero-sum game
a situation in which you receive as much money or advantages as you give away得失所系的赌赛；一人或一方得益必然引起另一人或另一方损失的局面，e.g.
1）It's not a zero-sum game in which either youth or pensioners must lose.这不是一场得失所系的赌赛，要么年轻人输，要么老年人输。
2）This appears to be a zero-sum game, because what one developing country gains is at the expense of another.这似乎是一场得失所系的赌赛，因为一个发展中国家所赢是以另一个发展中国家的所输为代价。
Questions:
- Why is foreign direct investment seen as a "seal of approval" on a country's policies and prospects?
- How does foreign direct investment contribute to the economic development, especially in developing countries?/What crucial role does foreign direct investment play in the economic development, especially in developing countries?
- What factors help to attract foreign direct investment?
- Why is it expected that foreign direct investment to rich countries will decrease?
- How much had the developing countries' share of global FDI inflows reached by 2005?
- How much will the total of foreign direct investment have reached by 2005?
- How much does the United States account for in the world's inflows of foreign direct investment?
- Which country is probably the biggest per-capita FDI recipient in the world? Where do Britain and the United States stand respectively in terms of FDI per-capita?
- What relationship exists between foreign direct investment and business conditions?
