Higher taxes may help offset budget deficits in the short term but unfair tax systems can hit wealth creation and hinder innovation, says Courtney Fingar.

As the UK’s economic forecast – while still brighter than that of the euro zone – starts to look a bit less sunny, the chancellor, Gordon Brown, will inevitably be casting around for new sources of government revenue.

The US Supreme Court has announced that it will hear Cuno v. DaimlerChrysler, a case that could radically change the use of state and municipality tax incentives to entice new investment. Oral arguments have been slated for March 1, 2006, with the court expected to rule some time before the autumn.

In late November, General Motors (GM) said it was laying off 30,000 workers; its market share continues to decline. Ford is expected to announce further restructuring by mid-January. Meanwhile, foreign auto makers in the US continue to grow and their market shares are increasing.

Lower economic output, brought on partly by the sharp rise in oil prices, will slow world trade growth in 2005, according to World Trade Organization economists.

Images of the poisoned Songhua river and people struggling to get clean water have brought home the uncomfortable truth that China’s spectacular economic growth comes at a human and environmental cost.

The US has topped a new Deloitte & Touche ranking of the world’s most competitive places to do business.

The planned acquisition of seven European banks by Russian banking institution Vneshtorgbank (VTB) could have important implications for foreign direct investment into Russia.

Companies that want to launch in Asia but avoid the pitfalls should take time to find a location that complements their organisation, and allow the overseas operation the flexibility to cater to local customers. Siemens’ Siegfried Neubauer explains why to Lawrence Yeo.

Everybody talks about Asia’s attractiveness and market potential but not everyone will reap it successfully. The monthly cash burn rate of a small foreign company set up in Singapore is already about $120,000 and yet we do not read much of market failures.

Legal challenges from the world of foreign direct investment.By Luke Peterson.

Florida-headquartered Smith Sterling – part of Glidewell Laboratories, the world’s largest dental manufacturer – plans to invest more than $30m in Costa Rica in the next few years.

India's third-largest business enterprise, the Tata Group, has revealed it is poised to make substantial investments in a range of South African market segments.

UK-based engineering firm Rolls-Royce Group is believed to be planning to establish a factory in the US to make a new generation of its Trent aero engines.

When Delta Pharm invested €4m in a new production facility in Plelo, Brittany, it not only gave a substantial boost to the France Atlantique bio-cluster, but also created 60 new jobs in the area.

Spurred by the events of September 11, the Bank of New York decided the best hedge against unforeseen disaster was to scatter its operations across many different locations. The most recent beneficiary of this strategy, writes Courtney Fingar, is the English city of Manchester.

From the horrors of September 11, the Manhattan-based Bank of New York (BONY) drew one notable lesson: decentralise as a means of spreading risk.

Premier Steve Bracks is determined to make Victoria more than just Australia’s foremost state in the biotech arena – he is aiming for the global top five. He explains his strategy to Courtney Fingar.

In the wake of Hurricane Katrina’s assault on the US Gulf Coast, the affected states are working hard to maintain investment levels, and companies operating there are struggling to find equilibrium, as Erika Morphy reports.

Like other enterprises operating out of New Orleans in the wake of Hurricane Katrina, the city’s sports teams have also had to find new homes, if only temporarily, writes Courtney Fingar.

While football’s Saints franchise is basing itself outside San Antonio for the time being and considering a permanent move to Los Angeles, the local professional basketball team, the Hornets, headed north to Oklahoma City. The Hornets are to play 35 ‘home’ games in Oklahoma City’s 20,000-seat arena.

Hong Kong earns the title of Asian city of the future with India and Australia picking up the regional honours. Courtney Fingar reports on who’s doing most to attract foreign direct investment.

COST EFFECTIVENESS(city):

Winner: Naga City,Philippines

Naga City says it can offer investors “the amenities of a first-class city in a rural setting”. One of the advantages of a more rural setting is low costs, and Naga City looks like a good bargain across the board.

Access to Asia’s exciting markets and a world-class infrastructure are just two of the elements that make Hong Kong a strong value proposition.

On a visit to Pyongyang, Stephen Timewell examines the state of North Korea’s fledgling banking system, which is slowly developing in order to increase foreign trade.

Morocco is working hard to combat its weaker points and boost its strengths via aggressive trade liberalisation and the promotion of sectors that have shown growth potential, from agriculture to aerospace. James Eedes reports.

Turkey is keen to show that it is worthy of EU membership by inviting outside investment and encouraging competition.Elaine Green reports.

Turkey’s ruling Justice and Development Party (AKP) is understandably keen to prove it has a modern market economy in order to facilitate EU entry.

GYODER, the Association of Real Estate Investment Companies, expects a new mortgage finance scheme to energise much more than just the country’s housing market, writes Metin Demirsar.

Gyoder, the Istanbul-based Association of Real Estate Investment Companies, is gearing up for a national housing finance system that is expected to galvanise Turkey’s construction industry and property market, allow middle and low-income families to become home owners, fuel economic growth across the country and draw in foreign investment. Turkey’s Grand National Assembly is slated to pass legislation on a legalised mortgage system at the start of 2006.

Since launching its brand, SpenglerFox, the cross-border executive search and human resources consultancy group, has opened 13 offices across Europe and the Middle East, proving to clients and investors its dedication to being the leading network partner in executive search.

As Turkish trade booms, domestic producers are becoming more market-savvy and autos are challenging textiles for export supremacy.Emre Alkin, of the Turkish Exporters Assembly, tells Metin Demirsar what is behind these developments.

Turkey’s foreign sales will increase dramatically from a projected $72bn this year to $100bn at the end of 2009, a rise of 39%, according to Emre Alkin, director-general of the Turkish Exporters Assembly (TIM), an umbrella group of export associations.

As investment in new vehicle models grows in Turkey, the industry looks set to move up Europe’s automobile output league tables. Metin Demirsar reports.

In the tight race for market share – indeed survival – car makers are desperately seeking more innovative technologies. Karen E Thuermer reports.

fDi scans the global inward investment landscape for the most important projects in each region in 2005.

What does it say about the tenuous nature of FDI projects that more than half of those that fDi originally chose as winners have gone wobbly since their announcement? In some cases, the investors went shy about confirming their deals or elaborating about them; in others the host governments seemed to change their minds about what they could offer. Either way, the result was an air of uncertainty. All the more reason then to applaud the projects that are seen through to completion.

China’s voracious appetite for natural resources is proving a boon to South America’s emerging economies. But while trade is picking up rapidly, Chinese investment into the continent has been slower to materialise. Jason Mitchell reports from Buenos Aires.

Companies that want to expand into foreign markets could minimise the downside by using the help of business intermediaries, a term that covers a range of professional services, as Douglas Clark and Adam Breeze explain.

The agenda of investment promotion agencies has historically been supply driven. With developing regions such as Asia now set to drive global growth, it is likely that there will be a shift to a demand-driven paradigm. Keith W Rabin explains.

The world’s largest transnational corporations (TNCs) have resumed their international expansion after a few years of consolidation during the global economic slowdown.

The business climate for companies heavily focused on research and development (R&D) has continued to improve in all regions, but most rapidly for companies from North America.

TABLES: (SEE DOWNLOAD FILE)

TABLE1: Top 10 sectors in the R&D Global 1000

TABLE2: Changes in R&D for the top eight countries

TABLE3: Large R&D companies showing the largest and smallest R&D growth rate

The US and other free trade advocates in the western hemisphere are quietly attempting to form an Americas free trade area by default, through the use of bilateral and sub-regional trade agreements. Although still to be ratified by Costa Rica, DR-CAFTA is the most ambitious. Erika Morphy explains.

CAFTA proponents say the trade agreement is a boon for Central American countries. However, one rating agency says that the region must step up investment in its infrastructure and workforce if it wishes to reap the maximum benefits.

The Dominican Republic has been keen to join the Central America Free Trade Agreement, despite having to give up its tariffs. What does signing up mean for the country and what will it gain in return? Karen E Thuermer investigates.

As the CAFTA countries compete to be the preferred ‘nearshore’ location for the US market, the Dominican Republic tries to get an edge by improving its skill set. Karen E Thuermer reports.

DR-CAFTA is to free up trade in financial services as well as tangible goods. The competition it will bring and the reforms it will encourage should be good for the Dominican Republic’s financial services sector, writes Karen E Thuermer.

Egypt is making steady progress on economic liberalisation and, despite state-sanctioned brutality in the face of opposition gains during elections, the cabinet intends to accelerate these reforms. James Eedes reports.

Untangling the knot of red tape that chokes the private sector is only part of Egypt’s problem. The government also has to tackle deep-seated perceptions about the country’s obstacle-ridden business environment. James Eedes reports.

Not only is Sokhna Egypt’s first deep-sea port, its highly sophisticated infrastructure is positioning it as an investment gateway for the country, writes James Eedes.

Given the early stage of its development, Sokhna will be able to build around its customers’ needs. Among the first being catered for are a sugar refinery and a cutting-edge biodiesel plant. James Eedes reports.