The key message: global FDI continued to rise in 2011 despite economic uncertainties;  however, prospects remain guarded.   Outward FDI by developed-country multinationals increased, but outward FDI by developing-country multinationals appears to have lost some momentum.

• Global FDI outflows (the focus of this issue of the GITM) rose by 16 per cent in 2011, to an estimated US$1.66 trillion, just surpassing the pre-crisis level, but still 25 per cent short of the 2007 peak.  

• The growth of FDI outflows in 2011 was due in large part to cross-border acquisitions and increased cash reserves kept in foreign affiliates, rather than the much-needed direct investment in new productive assets through greenfield investment or expansion of existing foreign affiliates.

• Outward FDI from developed countries rose by 25 per cent, exceeding US$1.23 trillion, with the European Union, North America and Japan all contributing to the growth. United States TNCs increased cash holdings in their foreign affiliates in the form of reinvested (retained) earnings.

• FDI outflows from developing countries fell by 7 per cent mainly due to significant declines in outward FDI from Latin American and the Caribbean and a slow down in the growth of investments from developing Asia. As a result, the share of developing and transition economies in global FDI outflows declined from 31 per cent in 2010 to 26 per cent in 2011. Nevertheless, the outward FDI from developing and transition economies remained important, at its second highest level recorded ever.

• Prospects for FDI outflows in 2012 continue to improve since the depth of the crisis, but they remain guarded due to the fragility of the global economic recovery.

For your information, the next issue of UNCTAD's Investment Policy Monitor will be released in May 2012.


James X. Zhan
Director
Investment & Enterprise Division
United Nations Conference on Trade & Development
Palais des Nations, Geneva
Tel: +41 22 9175797
www.unctad.org/diae


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