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Investment
Rising tide of FDI reaches Africa
In 2006/7, global foreign direct investment flows reached a new record, registering around $1.3 trillion. Significantly, a new pattern has been emerging. Flows to the developing world are increasing and south-south investment is on the rise. In 2006, FDI inflows to Africa doubled since 2004 to around $39bn, a record in monetary terms despite a fall in percentage terms. In this Cover Story, we examine the global movement of FDI and how Africa fits into the wider picture. We also ask how Africa can attract more of the ‘right’ kind of investment.
The world in 2006/07 was a significantly kinder and more prosperous place than it was in the preceding couple of decades. And that was mostly because of a more settled global economic environment that expanded at an admittedly tentative 3%. Nonetheless, it was a smoother ride than the world’s investors have enjoyed for some time and it encouraged them to spend $1.3 trillion in foreign direct investment (FDI) and mergers and acquisitions. The story was even brighter for the developing world. Emerging countries continued to demonstrate not only that their economic coming of age was sustainable; it was happening more quickly than was generally realised. In an unprecedented development, emerging countries began investing in one another because they had most of what was needed to nurture hungry bilateral economic growth.
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