LAWFUEL – Legal News, Legal Jobs – New analysis of global flows of For…

LAWFUEL – Legal News, Legal Jobs – New analysis of global flows of Foreign Direct Investment (FDI) conducted by the Economist Intelligence Unit (EIU) and commissioned by Clifford Chance suggests that the high level of cross-border Mergers & Acquisitions is likely to continue, though at a slower growth rate.

The analysis identifies many positive factors which are expected to push FDI flows upwards. Equally possible constraining factors are expected to include the impact on FDI flows of different Government approaches to M&A activity. The EIU’s ‘baseline’ prediction of FDI flows (which are very closely associated with the value of cross border M&A) is that after strong growth in 2004, 2005 and 2006 (where FDI flows are predicted to grow by 22 per cent), the average annual growth rate for 2006 to 2010 will be around 8%.

As alternative scenarios to its baseline forecast, the EIU offers a ‘boom’ and ‘backlash’ scenario. The creation of an encouraging environment for cross border M&A (the boom) could create additional global value of nearly US$2 trillion over the EIU baseline predictions for FDI inflows between 2006 and 2010. By contrast, a more protectionist approach (the backlash) could impair FDI flows by as much as 20% per annum against the EIU baseline prediction.

Peter Charlton, global head of M&A at Clifford Chance, said:

“Protectionism is certainly increasing but as we’ve seen in Europe we feel the economic forces driving M&A will prove irresistible.”

Other highlights include:

· Asia bookends the analysis with the highest and lowest FDI inflows per head over the last five years: Singapore is ranked first, Indonesia last of the world’s 82 leading economies. Belgian, in third place overall, is the largest European beneficiary of FDI inflows per head of population, with Ireland in fourth place and the Netherlands fifth. The UK is placed seventh, France 11th and the USA 22nd.

For further information about this release contact Anna Ward on +44 (0)20 7006 2988V

New analysis of global flows of Foreign Direct Investment (FDI) conducted by the Economist Intelligence Unit (EIU) and commissioned by Clifford Chance suggests that the high level of cross-border Mergers & Acquisitions is likely to continue, though at a slower growth rate.

Foreign Direct Investment Report commissioned by Clifford Chance
The analysis identifies many positive factors which are expected to push FDI flows upwards. Equally possible constraining factors are expected to include the impact on FDI flows of different Government approaches to M&A activity. The EIU’s ‘baseline’ prediction of FDI flows (which are very closely associated with the value of cross border M&A) is that after strong growth in 2004, 2005 and 2006 (where FDI flows are predicted to grow by 22 per cent), the average annual growth rate for 2006 to 2010 will be around 8%.

As alternative scenarios to its baseline forecast, the EIU offers a ‘boom’ and ‘backlash’ scenario. The creation of an encouraging environment for cross border M&A (the boom) could create additional global value of nearly US$2 trillion over the EIU baseline predictions for FDI inflows between 2006 and 2010. By contrast, a more protectionist approach (the backlash) could impair FDI flows by as much as 20% per annum against the EIU baseline prediction.

Peter Charlton, global head of M&A at Clifford Chance, said:

“Protectionism is certainly increasing but as we’ve seen in Europe we feel the economic forces driving M&A will prove irresistible.”

Other highlights include:

· Asia bookends the analysis with the highest and lowest FDI inflows per head over the last five years: Singapore is ranked first, Indonesia last of the world’s 82 leading economies. Belgian, in third place overall, is the largest European beneficiary of FDI inflows per head of population, with Ireland in fourth place and the Netherlands fifth. The UK is placed seventh, France 11th and the USA 22nd.

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