First, the recent year-to-year changes in FDI to the US and other developed countries have been influenced most by changes in cross-border merger and acquisition activity. Cross border M&A was down almost 20% in 2003, against year-to-year reductions of 38% and 48% in 2002 and 2001.

Second, rather than an expression of comparative economic attractiveness, M&A-triggered FDI might often be seen as an indicator of what happens when moribund or comparatively non-performing companies (or economies) are being acquired on the cheap by more competitive enterprises from a more competitive economy. For those on the receiving end of this kind of FDI, it may not be because they have such a wonderful country: it could mean the opposite.

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If those countries where M&A-induced FDI is on the rise insist on celebrating the increase, the celebration might be short-lived. Rather than heralding success and a rationale for bonuses at investment promotion agencies, M&A-induced FDI often portends a reduction in local employment as the new owners combine, rationalise and restructure. In Europe, this trend is becoming more obvious as M&A deals are increasingly being dominated by financial buyers – private equity funds that are bursting with resources in search of better returns than those recently available in public equities and debt markets.

When the bodies politic are most interested in jobs, perhaps Unctad should be measuring foreign direct employment as well as FDI.

Daniel Malachuk is senior managing director at CB Richard Ellis Consulting, New York. During his career, he has advised many of the US’s leading companies and has worked in the White House. E-mail: daniel.malachuk@cbre.com