Economists and governments agree these days on the crucial importance of foreign direct investment (FDI). They see it both as the global market's "seal of approval" on a country's policies and prospects, and as a force, especially in developing countries, for far-reaching economic change. This consensus is surprising when you remember that FDI remains politically sensitive in many poor, and some not-so-poor, countries. But the benefits are so great that reservations on this account have been put aside. The point about FDI is that it is far more than mere "capital": it is a uniquely potent bundle of capital, contacts, and managerial and technological knowledge. It is the cutting edge of globalization.
The outlook for FDI-in total, and country by country--is therefore a matter of great interest. Forecasting it, however, is far from easy. The determinants are complicated, and not always susceptible to measurement. Up to now, so far as this column is aware, detailed forecasts have not been attempted. In a report published this week, the Economist Intelligence Unit (EIU), a sister company of The Economist, has ventured into this uncharted territory. It provides a forecast for FDI extending to 2005 for no fewer than 60 countries (accounting for virtually all of the world's actual and projected flows of FDI).
The main difficulty arises from the fact that FDI depends closely on what the EIU calls the business environment--a necessarily broad term that includes, on the firm's definition,70 separate indicators. Some of these are political, and to the extent that they can be measured at all have to be gauged through surveys that ask investors questions such as, "Is the quality of the bureaucracy and its ability to carry out government policy very high, high, moderate, low or very low?" It is one thing to compile this kind of evidence into a backward-looking aggregate which can then be tested for its ability to explain past movements in FDI. It is quite another to use it for forecasting- because to do that the researcher has to predict how political and other conditions will change.
There is no alternative but to blend together different kinds of information. First, take whatever evidence econometrics can yield about the way the forces driving, FDI--size of host-country market, expected growth, input costs, geography and natural resources, and the policy framework have worked in the past. Next, add conventional forecasts of relevant economic aggregates. Third, unavoidably, make more qualitative and speculative assessments of changes in other, "non-economic", conditions. All this the study tries to do. It is academically impure, because it has to be. But the workings and the supporting information are in plain view, and the results are very interesting.
Global FDI flows are projected to shrink markedly this year, from $1.1 trillion in 2000 to less than $ 800 billion. Almost all of the reduction is forecast to be in FDI to rich countries, driven by the slowdown in America and by the diminishing pace of mergers and acquisitions (which are a principal driver of FDI in the developed economies). FDI to poor countries merely pauses, at around $ 220 billion. In subsequent years, flows recover across the board, but growth in flows to poor countries continues to outpace, modestly, growth in flows to rich ones. By then, the global stock of FDI will have risen to more than $10 trillion, according to the report, from less than $ 6 trillion last year.

单选题 Why is FDI of crucial importance to many countries?
A. Because it generates tax revenue for host governments.
B. Because it signifies an approval on a country's policies and prospects.
C. Because it is a politically stabilizing force.
D. Because it transforms the management practice of the host countries.

单选题 The phrase "cutting edge" in the first paragraph refers to ______.
A. advanced technology B. management know-how
C. FDI D. financial strength

单选题 According to paragraph 2, forecasting FDI is not an easy matter because ______.
A. the determinants of FDI are complicated and not easy to measure
B. most investors undertaking FDI refrain from releasing data to surveyors
C. a satisfactory forecasting model is yet to be designed
D. few organizations are interested in conducting such a forecast.

单选题 The word "territory" in paragraph 2 is closest in meaning to ______.
A. land B. terror C. area D. province.

单选题 According to the passage, all of the following should be considered as a factor of business environment EXCEPT ______.
A. the administrative system B. the political situation
C. the government policy D. the country's history

单选题 What is the second step in arriving at a forecast on FDI?
A. To decide on a forecasting model.
B. To gather evidence about the way driving forces of FDI have worked.
C. To consider non-economic forces.
D. To incorporate conventional forecasts of economic aggregates.

单选题 Which sentence below best expresses the essential information in the highlighted sentence in paragraph 4? Incorrect choices change the meaning in important ways or leave out essential information.
A. There has been much academic corruption involved in the study, but the researchers have no other choice in order to get enough information.
B. Strictly speaking, the study is not academic enough, since one has to do some speculations and consider many factors.
C. The study is not scientific enough, so the results are not reliable, although that is what the researcher can best do.
D. This kind of research should not be purely academic, since this is universal practice in this area of study.

单选题 FDI in developing countries was expected to slow down mainly because ______.
A. America's economy slackened
B. governments in these countries have changed their policies toward mu ltinationals
C. much of fund for investment was lured away to developing countries
D. most of international investors were not confident about the future trend of world economy

单选题 The report mentioned in the text holds that the scope for further growth of FDI ______.
A. is to be severely limited B. is to be expanded
C. remain uncertain D. diminish gradually

单选题 What is the main purpose of the passage?
A. To caution against the negative effects of unbridled globalization.
B. To criticize the wrong approaches of host countries to FDI.
C. To introduce a newly issued report on FDI.
D. To assess the benefits and drawbacks of FDI.

单选题 According to the report, which country or region enjoys the highest FDI per person?
A. the United States. B. Britain.
C. the Netherlands. D. Ireland.

单选题 Look at the four squares, , , and

填空题 Directions: Select the appropriate countries or regions from the answer choices and match them to the type of business environment scoring. TWO of the answer choices will NOT be used. This question is worth 3 points.
The countries or regions whose scores going down
·______
·______
The countries or regions whose scores going up
·______
·______
·______

A. Thailand.
B. Poland.
C. The United States.
D. France.
E. Hong Kong SAR.

F. Malaysia.

G. Britain.