The focus of investing in healthy child development continues to be a government priority.

The key to restoring China s GDP growth is, therefore, returning fixed asset investment growth to at least 25 .

FDI by SMEs involved evaluation of investment locations based on a set of variables which could be clustered under markets, costs, natural resources, infrastructure framework, policy framework and business promotion and support factors.

Indeed, rapid growth in investment may translate into high import growth and trade deficits.

Some people may argue that investment growth without consumption growth will result in overcapacity and eventually lead to recession.

Export growth was often very fast, as in the Philippines, Mexico, and to some extent Morocco.

According to preliminary reports, annual investment growth in 2012 reached roughly 14 significantly higher than the GDP growth rate, which accelerated in the fourth quarter as a result of a strong rebound in investment in real estate and infrastructure.

At this point, policy becomes expansionary again, and the cycle begins anew led by investment growth, the economy rebounds.

Negative OFDI growth was experienced in 1985, 1989, 1998 and 2002.

So, even if there are good reasons to expect a period of sub par investment and employment growth, this need not translate into slow productivity or GDP growth.

Also driving China s high investment rate is the declining efficiency of investment capital, reflected in China s high incremental capital output ratio (annual investment divided by annual output growth).

To be sure, the prolonged rapid increase in Chinese aggregate demand has been fueled by an investment boom, as well as a growing trade surplus.

Moreover, any investment growth is vital for Germany, which, according to the latest OECD statistics, currently suffers from the world s lowest share of net investment in national income. Even if Germany remains the world s laggard, rising investment demand as such will contribute to GDP growth, which Ifo estimates at 1.7 in 2006.

Today, domestic investment has plummeted, exports are languishing, and GDP growth is down to around 4.5 per year.

Second, the Chinese production mix does not correspond to domestic demand, and investment in long products has outpaced demand growth.

China s real estate investment accounted for 10 of GDP, and slower investment growth in the sector necessarily reduces import demand, directly and indirectly.

When Chinese growth eventually becomes less dependent on investment, growth rates in steel consumption can be expected to fall sharply.

A developing country that creates a transparent and accountable environment that respects good governance and the rule of law will attract domestic and foreign investment, which will foster the growth of a vibrant private sector.

But domestic demand, which determines imports, consists not only of consumption, but also of fixed asset investment. Indeed, rapid growth in investment may translate into high import growth and trade deficits.

In 1995 2010, when China s average annual GDP growth rate was 9.9 , fixed asset investment (investment in infrastructure and real estate projects) increased by a factor of 11.2, rising at an average annual rate of 20 .

The problem is that the investment share of China s GDP is already about 50 , while double digit investment growth in 2013 is expected to push that rate still higher.

The increased interest rates are likely to retard private investment, which lowers future growth in employment and wages.

So China is stuck in a currency creating cycle GDP growth encourages investment, which boosts demand for capital.

And, with growing over capacity, investment in goods production may fall even further, with serious implications for GDP.

This would enable the PBC to manage domestic demand by allowing interest rates to rise in order to rein in credit growth and deter reckless investment.

As mentioned above, these flows not only sustain consumption in home countries but also support investment activities and lead to higher output growth.

Table 1. FDI outward stock, by region and major economies, 1980 2003

A panel of experts on FDI presented data related to the growth of FDI outflows from developing countries, this growth being fastest in the Asia Pacific region, which now accounted for nearly three quarters of developing country outward FDI stock.

It may therefore be tempting to invest in inflation indexed bonds, which adjust both principal and interest payments to offset the effects of changes in price growth.

These economies, the study concluded, achieved high growth rates by getting the basics right, promoting investment, nurturing human capital, and opening up to export manufacturing.

The emergence of institutional investors, such as pension funds and insurance companies, can encourage the development of stock markets, being an important source of demand for financial assets.

China has similar problems, with the investment growth nexus threatening macroeconomic stability witness the overheating that occurred in 2003 and 2004.

Over the last 30 years, in terms of the GDP growth rates, China has grown at twice the rate of India.

At the same time, the contribution from investment surged from 2.3 percentage points of GDP growth in the first quarter of 2013 to 5.9 percentage points in the second quarter.

Lower asset prices may slow total investment growth and GDP, but if the slowdown is (supposedly) from 11 to 9 , China will avoid economic over heating yet still enjoy sustainable high growth.

Austere Growth?

In this context, productivity growth whether through technical progress, better allocation of resources, or productive investment is as important a variable for the southern economies as wage restraint is.

Nevertheless, annual GDP grew by 8.7 , thanks to 16.9 growth in consumption (measured by gross sale of consumer goods) and a 33.3 surge in fixed investment demand.

It is about targeted microeconomic reforms that reduce or remove barriers to private investment, thereby encouraging the non financial corporate sector to propel European GDP growth.

It particularly acknowledged UNIDO's pivotal role in promoting Africa Asia investment and business links, an initiative that had demonstrated great potential for bringing about accelerated private sector growth through trade.

For example, if the economy achieves and maintains an annual growth rate of 4 per cent between 2006 and 2015, investment in access to water in rural areas will have to be approximately 1.2 billion quetzales.

The growth of OFDI had increased domestic production through reallocation of resources instead of hollowing out of domestic industries, which has a positive impact on the economy of the Republic of Korea.

But wages have grown at a far slower pace than GDP.

In 2013, it can be expected that, barring major disruptions, strong investment growth will push China s GDP more than 8 higher year on year.

Finally, after welcoming foreign investment, which contributed greatly to Chinese manufacturing growth and export competitiveness, some in China would now tighten restrictions on foreign investment to protect China s domestic industries.