World Energy Outlook 2007

Figure 3.5: Foreign and Overseas Direct Investment, 2005
180
1
billion dollars
150
120
90
60
30
0
3
2
6
3
4
2
5
1
6 10
7
5
8 12
9
9
10
39
3
–30
United
Kingdom
China*
United
States**
France Netherlands Canada Germany Belgium Spain India
Foreign direct investment Overseas direct investment World ranking
*China includes Mainland China and Hong Kong.
**In 2005, US overseas direct investment fell sharply and turned negative, largely as the temporary effect of a change
in tax rules, which make it very profitable for US companies to repatriate earnings from abroad (OECD, 2006).
Source: UNCTAD database.
Global Economic and Energy Market Linkages
Both China and India will continue to play an increasingly important role in
global trade in view of their potential for boosting exports of both
manufactures and, increasingly, services. This will pose challenges for the rest
of the world, but will also bring opportunities. The two countries’ growing
weight in international trade will undoubtedly intensify competition in export
markets. In industrialised countries, the share of China and India (and other
developing countries) in their imports will continue to rise, putting further
downward pressure on margins and wage levels in the sectors that are least able
to compete – especially labour-intensive, low value-added production of goods
and services that can be traded easily, such as textiles. These countries will
continue to focus on higher value-added, more specialised manufacturing and
services. But they worry that China and India can readily acquire and master
the newest technologies, such that their exports displace the rich countries’ sales
in their own domestic and export markets. Growing reliance on China and
India for business services threatens further to undermine profitable
opportunities for investment and jobs in the industrialised world. Similar
pressures are building in higher-income developing countries, many of whom
Chapter 3 - International Trade and the World Economy 145