Overseas Investments Head for High

Despite financial crises in Asia and Russia and slower global economic growth, world business giants expect to spend a record $430 billion to $440 billion expanding overseas operations this year, an international trade report said Tuesday.

Such investment flows are the engine driving globalization of the world economy and are increasing as nations’ financial systems become more intertwined, according to an annual report by the U.N. Conference on Trade and Development.

But Asia’s financial turmoil might put the brakes on flows to that region for the first time since 1985. The report said that projected investment in China this year will be $40 billion, down $5 billion from 1997.

Given the gloomy financial news from around the world in recent months, the U.N. agency’s chief economist, Karl Savant, said many people might find it surprising that the organization is predicting rising levels in foreign investment for 1998.

But he said the world’s biggest corporations “have long-term horizons for foreign direct investment and returns on these investments.”