Foreign direct investment: an 'important catalyst.' (includes related article on UN report on transnational corporations) (United Nations developments)

The importance of foreign direct investment, particularly of transnational corporations (TNCs), in integration of economies in transition into the world economy was stressed by the Commission on Transnational Corporations at its nineteenth session (5-15 April, New York).

In an omnibus resolution - one of two texts adopted without a vote - the Commission stated that such an integration should be achieved through an "increase in inflows of foreign direct investment". It also noted the role of TNCS in the development of small - and medium-sized enterprises.

The Secretary-General was asked, in coordination with multilateral organizations, regional economic commissions and financial institutions, to give priority to strengthening technical cooperation to assist developing and other recipient countries in creating a "favourable investment climate".

He was also to promote and provide advice on the "interrelationship between foreign direct investment and interregional, regional and subregional economic integration and technical and economic cooperation".

Reports were asked on the role of foreign direct investment in Africa, on investment flows to developing countries, particularly the least developed countries outside Africa, and on follow-up to the UN Conference on Environment and Development as relating to TNCs, for transmission to the Commission for Sustainable Development.

With regard to TNC activity in South Africa, the Commission stated that Governments, entrepreneurs and enterprises, including TNCs, had "contributed to the demise of the apartheid system". Now, they should take appropriate measures to help achieve a "united, non-racial and democratic South Africa".

The Commission's validity was reaffirmed as the UN focal point for comprehensive intergovernmental consideration of issues concerning foreign direct investment as related to TNCS.

TNCs and world economy

In debate, speakers focused on recent trends in the world economy, including the emergence of an "integrated international production system" and the decline in worldwide investment flows, attributed to a number of economic and political factors. Many agreed on the increasing role of developing countries as recipients and sources of foreign direct investment.

Such investment, it was stressed, would be an "important catalyst" in the process of opening up Central and Eastern European economies and in integrating them into the world economy. Those countries should encourage foreign...