Foreign direct investment (FDI) in developing countries has risen sharply in recent years, becoming the most important source of external financing for some of them.
In China, the top non-OECD recipient in value terms, FDI was equal to 27.6% of GDP in 1998, compared with 3.1% in 1980, and employees of foreign firms numbered 18.4 million people, 2.6% of the total workforce. FDI plays an even more important role in other leading non-OECD recipients, with Indonesia showing an FDI to GDP ratio of 77.3% in 1998, up from 14.2% in 1980, while in Argentina the ratio doubled during the period from 6.9% to 13.9%.
But perhaps the most striking increase came in Vietnam, with FDI at 0.2% of GDP in 1980 and 54.5% in 1998 when it was ranked 19 th among non-OECD FDI recipients. By contrast, the world average FDI to GDP ratio is around 14%, with the EU at 17.3% and the US level at 9.5%.
• World Investment Report, UNCTAD, 2000.
©OECD Observer No 228, September 2001