Dear Sir or Madam,
It is my pleasure to share with you the key findings of UNCTAD's
World Investment Report 2015 on Recent Global FDI Trends: Geographical
Foreign direct investment (FDI) flows to developing economies reached their
highest level ever, at $681 billion with a 2 per cent rise. Developing
economies thus extended their lead in global inflows. China became the
world's largest recipient of FDI. Among the top 10 FDI recipients in the
world, 5 are developing economies.
Asia saw FDI inflows grow to historically high levels, reaching nearly
half a trillion dollars in 2014, further consolidating the region’s position
as the largest recipient in the world. Multinational enterprises (MNEs)
have become a major force in enhancing regional connectivity in East and
South-East Asia, including through cross-border investment in infrastructure.
In West Asia weakening private investment in parts of the region is partly
compensated by increased public investment, which has boosted non-equity
modes (NEMs) of MNE activities in areas such as construction. In South
Asia, FDI continues to increase in the manufacturing sector such as automotives.
inflows to Africa remained flat at $54 billion. Although the services share
in FDI in Africa is still lower than the global and the developing-country
averages, services accounted for 48 per cent of the total FDI stock in
the region (mainly concentrated in a few advanced countries), more than
twice the share of manufacturing (21 per cent). FDI stock in the primary
sector was 31 per cent of the total.
flows to Latin America and the Caribbean decreased to $159 billion in 2014,
after four years of consecutive increases. This was mainly due to a decline
in cross-border mergers and acquisitions (M&As) in Central America
and the Caribbean and to lower commodity prices, which dampened FDI to
South America. The FDI slowdown, after a period of strong inflows driven
by high commodity prices, may be an opportunity for Latin American countries
to re-evaluate FDI strategies.
FDI inflows to structurally weak developing groups varied. FDI to the least
developed countries (LDCs) increased by 4 per cent. Landlocked developing
countries (LLDCs) experienced a decline of 3 per cent in FDI inflows, mostly
in those in Asia and Latin America. By contrast, FDI inflows to Small Island
Developing States (SIDS) increased by 22 per cent, due to a rise in cross-border
M&A sales. These variations in FDI inflows, differences in other sources
of external flows, and dissimilar development priorities require a careful
evaluation of strategies by groups and individual countries for the post-2015
development agenda when FDI is combined with ODA and other domestic and
foreign sources of finance.
South‐South FDI flows, including intraregional flows, have intensified
in recent years. FDI outward stock from developing economies to other developing
economies, grew by two-thirds from $1.7 trillion in 2009 to $2.9 trillion
in 2013. The share of the poorest developing regions in South-South FDI
is still low, but growing.
The low level of flows to developed countries persisted in 2014. FDI flows
to this group of economies declined by 28 per cent to $499 billion. Divestment
and large swings in intracompany loans reduced inflows to the lowest level
since 2004. The numbers were also significantly affected by a single large-scale
divestment from the United States. The impact of MNE operations on their
home countries' balance of payments has increased, not only through FDI,
but also through intra-firm trade and FDI income. The recent experience
of the United States and Japan shows that growing investment income from
outward FDI can provide a counterbalance to the rising trade deficits.
FDI in transition economies decreased by 52 per cent to $48 billion in
2014. In the Commonwealth of Independent States (CIS), regional conflict
coupled with falling oil prices and international sanctions reduced foreign
investors’ confidence in the strength of local economies. The Russian
Federation − the largest host country in the region − saw its
FDI flows fall by 70 per cent due to the country's negative growth prospects,
and as an adjustment after the level reached in 2013 due to the exceptionally
large Rosneft−BP deal.
Most regional groupings and initiatives experienced a fall in inflows in
2014. The groups of economies negotiating the Transatlantic Trade and Investment
Partnership (TTIP) and the Trans-Pacific Partnership (TPP) saw their combined
share of global FDI inflows decline. ASEAN (up 5 per cent to $133 billion)
and the Regional Comprehensive Economic Partnership (RCEP) (up 4 per cent
to $363 billion) bucked the trend.
With best regards,
Director, Investment and Enterprise
Team leader, World Investment Report
Palais des Nations, Geneva
Tel: +41 22 917 5797
(World Investment Reports)