The latest global FDI trends and policy developments; an action plan for investment in sustainable development

Dear Members of the World Investment Network (WIN),

It is my pleasure to share with you the key findings of UNCTAD's World Investment Report 2014

Investment trend highlights

·        After the 2012 slump, global FDI returned to growth, with inflows rising 9% in 2013, to $1.45 trillion. Short term prospects also look positive and we project that FDI flows could rise to $1.6 trillion in 2014, $1.7 trillion in 2015 and $1.8 trillion in 2016.

·        Developing economies maintain their dominant share of global FDI, reaching 54% of global flows, while developed economies attracted 39%.

·        FDI outflows from developing and transition countries also reached a record level of $553 billion, or 39% of global FDI outflows - this compares with only 12% at the beginning of the 2000s.

·        The poorest countries are less dependent on extractive industry investment with manufacturing and services now making up about 90% of the value of announced greenfield projects in Africa and the LDCs.

·        State-owned investors are FDI heavyweights accounting for over 11% of global FDI flows despite making up less than 1% of all TNCs.

·        At the regional level, FDI to all major regions increased, although the structurally weak economies saw mixed results. Developing Asia is the largest FDI recipient, attracting far more FDI than that of either the EU or North America.

·        The report contains further analysis of some of the main features of regional FDI trends, including megaregional groupings. TPP, TTIP and RCEP each account for a quarter or more of global FDI flows. APEC remains the largest regional economic cooperation grouping, with 54% of global inflows.

Investment policy highlights

·        The share of regulatory or restrictive investment policies increased to 27% in 2013, although the majority of measures remain geared towards promotion and liberalisation.

·        There is divergence in international investment rulemaking: in one direction the negotiation of increasingly complex “megaregional agreements” that have systemic implications; in the other, disengagement from the system with countries opting out of BITs and ISDS.

·        Concerns about the functioning and impact of the IIA regime on sustainable development have led to increasing calls for reform of the system.

A global Action Plan for investment in sustainable development

·        Faced with common global economic, social and environmental challenges, the international community is defining a set of Sustainable Development Goals (SDGs) for the period 2015 and 2030.

·        To achieve these goals, we estimate that the investment gap for developing countries is currently about $2.5 trillion per year, mainly for basic infrastructure, food security, climate change adaptation, health, and education.

·        The  Report therefore proposes a Strategic Framework for Private Investment in the SDGs that addresses the key challenges for (i) guiding and galvanizing action for private investment; (ii) mobilizing funds for investment to meet developing country needs; (iii) channeling  investments to SDG sectors; and, (iv) maximizing the impact of private investment while minimizing any risks.

·        The Report proposes an Action Plan for Private Investment in the SDGs that presents a range of policy options and a focused set of action packages that can help shape a Big Push for private investment in sustainable development.

We hope you find this year's report informative and look forward to your engagement with the investment-for-development debate. You can participate online at UNCTAD's new look Investment Policy Hub, and meet global investment stakeholders  at the UNCTAD World Investment Forum 2014, 13-16 October, in Geneva - registration is free but places are limited!

With best regards,

James Zhan
Director, Investment and Enterprise
Team leader, World Investment Report
Palais des Nations, Geneva
Tel:+41229175797 (World Investment Reports)