Fall in global foreign direct investment in 2008. - Global foreign direct investment (FDI) inflows are estimated to have fallen by 21% in 2008 to an estimated $1.4 trillion, and will likely fall further in 2009, according to new estimates released today by UNCTAD (United Nations Conference on Trade and Development). In the face of a global economic recession, many companies have announced plans to curtail production, lay off workers, and cut capital expenditures, all of which tend to reduce FDI. The impact of the crisis varies widely depending on region and country, with consequently varying impacts on the geographic patterns of FDI flows. UNCTAD indicates that the current situation is very different from that of the last financial crisis, which originated in developing Asian countries in 1997. By contrast, the current crisis began in the developed world, although it is rapidly spreading to developing and transition economies. Developed countries have already been directly hit, while the effects of the crisis on developing economies have so far been indirect in most cases, with varying degrees of severity. This has affected the patterns of FDI location and FDI flows. Preliminary UNCTAD data for 2008 indicates that for many developed countries, FDI flows show a decline of about 33% from flows in 2007 ($840 billion in 2008 as opposed to 1 247bn in 2007). The most affected countries are Finland, Germany, Hungary, Italy, and the United Kingdom. Cross-border mergers and acquisitions also fell by a similar level (33%) (operations worth $982bn in 2008 as opposed to 1 454bn in 2007. In developing and transition economies, preliminary estimates suggest that FDI inflows have been more resilient, though the worst impacts of the global economic crisis had still, at year´s end, to be fully transmitted to these countries. The growth rate of FDI inflows to developing countries, while lower than in 2007 (when it exceeded 20%), should still have remained positive for 2008 at an estimated 4%, ù518bn (500bn in 2007). Flows to Africa were expected to have grown further, to more than US$60 billion (53bn in 2007), despite the slowdown in global economic growth and its negative consequences for the region. Flows to West Asia are expected to have declined significantly (more than 20%), following the record levels registered last year ($72bn in 2007 and 56bn in 2008). FDI flows to Latin America and the Caribbean, however, proved more resilient and increased by 13% in 2008 (an increase to $142bn compared to 126bn in 2007), partly due to an increase in FDI into South America. However, they continued to decline in Central America and the Caribbean and which are traditionally highly dependent on the United States economy. FDI flows to the transition economies of South-East Europe and the Commonwealth of Independent States (CIS) are estimated to have maintained their upward trend despite the financial crisis, global economic slowdown, and regional conflicts. A 2008 increase of about 6% is expected to have occurred there. Of the developing countries and transition economies, the largest (Brazil, Russian Federation, India, and China) are all estimated to have experienced a rise in FDI in 2008. Similarly, cross-border mergers and acquisitions in developing countries also rose during the year by some 16%, with much of that increase registered by Africa and Asia, although from a generally low level in Africa. In the short-term, the negative impacts of the financial and economic crises on FDI are expected to remain dominant and to contribute to a continued fall in overall FDI through 2009. Developing countries will not be spared. However, various positive factors are at work and will trigger, sooner or later, a resurgence of international investment flows.