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Last Updated: Thursday, 29 September 2005, 17:10 GMT 18:10 UK
Foreign investment rises, says UN
China steel plant
Resource-rich nations are particularly attractive for investors
Global investment flows into developing countries have bounced back from a three-year slump, according to an influential United Nations report.

The UN Conference on Trade and Development (Unctad) said foreign funds to developing countries rose by 40% to $233bn (132bn).

Meanwhile, in the developed world investment fell 14% to 380bn.

Developing nations in Asia reaped the most benefits, the report said, particularly from research funds.

Research & development (R&D) funds flowing into developing nations rose from 2% to 18% between 1996 and 2002.

China, India, Thailand and Singapore have attracted the lion's share of R&D money.

More than 50% of the world's top R&D spenders have major operations in these countries including Pfizer, DaimlerChrysler, Siemens, Toyota and General Electric.

Cheap option

The rebound in foreign investment has been fuelled by global corporations' activities abroad, the UN said.

The high level of foreign direct investment flows to developing countries is likely to be sustained
Annie Miroux, UN

Developing countries have a strong appeal for major firms, with low wages and large amounts of well-educated, skilled workers.

Multinationals have been "seeking to improve their competitiveness by expanding in the fast-growing markets of emerging economies and by seeking new ways to reduce costs," the UN said.

Overall foreign direct investment (FDI) flows last year reached $648bn, up 2% on 2003.

Six of the 10 economies with the largest increases in FDI were developing nations.

The top 10 were: the US, UK, Australia, Hong Kong, Brazil, China, Singapore, Mexico, South Korea and Russia.

"The high level of foreign direct investment flows to developing countries is likely to be sustained," said Annie Miroux of Unctad's World Investment Report.

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