increase in FDI outflows in 2010 was driven by higher reinvested earnings,
thanks to improved economic performance in many parts of the world and
increased profits of foreign affiliates, especially in developing countries.
This increase together with improvements in other investments (mainly intra-company
loans) offset equity investments – the component most directly related
to TNCs' long-term investment strategies – which remained sluggish in
M&As are still volatile. They increased in 2010 as a whole, reflecting
the growing value of assets on the stock market and the increased financial
capability of potential buyers, but declined again in the first quarter
of 2011. Greenfield investment projects, in contrast, are larger in value
and number than cross-border M&As, but also maintained their upward
trend at the beginning of 2011.
the global economy gaining strength, rising stock market valuations and
rebounding TNC corporate profits, UNCTAD expects FDI outflows to continue
to rise in 2011 . Ongoing corporate and industrial restructuring, and
a new wave of privatization in some countries, are creating new investment
opportunities for cash-rich companies based in both developed and developing
countries. TNCs from emerging economies are expected to continue to grow
a number of downside risks to FDI growth remain, such as the unpredictability
of global economic governance, the sovereign debt crisis in developed countries
and fiscal austerity, instability in some regions, rising energy prices
and the dangers inherent in inflation, and exchange rates volatility. In
addition, the rise in trade and investment protectionism continues to raise
concerns and might also play a part in potentially derailing FDI recovery.
For your information, the next issue of UNCTAD's Investment Policy Monitor
will be released on 29 April 2011.
James X. Zhan
Investment & Enterprise Division
United Nations Conference on Trade & Development
Palais des Nations, Geneva
Tel: +41 22 9175797