The United Nations Conference on Trade and Development (UNCTAD) says that although global foreign direct investment (FDI) flows remained flat last year, FDI flows to the U.S. rose threefold in 2003. This year's figures are expected to improve noticeably due to an improving global economy, higher corporate profitability, recovering M&A transactions, and growing investor confidence.

Indeed, the continuing low value and number of cross-border mergers and acquisitions (M&As)-the key driver of global FDI flows since the late 1980s-contributed heavily to the downturn, reports UNCTAD.

Regionally speaking, Africa's FDI inflows are expected to remain positive in 2004, based on expected investment in the oil sector. Privatization is likely to remain weak, says UNCTAD, although some large deals may come off, particularly in electricity and telecommunications.

Latin America and the Caribbean have been hit by declines in FDI flows for the past 4 years, with Argentina, Brazil, and Mexico being hurt especially hard. Concern over the economic and political climate in some Latin American countries, a slowdown in privatization, and weak global economic factors were the main reasons behind the downturn, according to UNCTAD. This year looks more promising, however, but will be largely dependent on the performances of Argentina and Brazil.