Malta among 'front runners' in world investment report

Malta is among 43 countries considered to be "front runners" in terms of high performance and high potential in terms of foreign direct investment, according to the World Investment Report 2002 released yesterday by the United Nations Conference on Trade and Development - UNCTAD.

Commenting on the report, Central Bank governor, Michael C. Bonello, said:

"The latest edition of UNCTAD's World Investment Report, which is today recognised as the most comprehensive and authoritative source of statistical data and analysis on foreign direct investment (FDI), contains some highly relevant messages for countries like Malta.

"One such message is that while FDI remains a major engine of growth, particularly in developing countries, it cannot be taken for granted. The decline in global FDI flows by more than half in 2001, the heaviest drop in 30 years, was a sobering reminder of this truth. This makes it all the more important for countries to measure how they are doing today in terms of attracting FDI and what their potential is for the future.

"In this respect it is a matter of great satisfaction to learn from the report that Malta is among the 'front runners' both in terms of performance, that is, its share in global FDI flows relative to its share in global GDP, and in terms of potential for attracting FDI, measured on the basis of structural factors, including social, political, institutional and economic variables.

"Malta's high ranking should not, however, give rise to complacency. It must be recognised that longer-term development gains from FDI do not occur automatically. Sustained competitiveness requires continuous upgrading towards higher value added activities. It also requires a targeted approach to FDI promotion which seeks to exploit a country's specific locational advantages.

"Since Malta lacks a sizeable domestic market, competitive advantage must be sought proactively though the creation of other endowments such as advanced labour skills and modern technological capabilities. Hence the importance of integrating the promotion of export oriented FDI into the county's overall development strategy."

UNCTAD reports that world FDI inflows plunged by 51 per cent last year to $735 billion, marking the first decline in a decade. The downturn was concentrated mainly in developed countries where a drop of 59 per cent was recorded, as against the 14 per cent drop in developing countries. Developing countries and central and eastern European economies are garnering a rising share of FDI overall, the UNCTAD report says.