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UNCTAD released Global Investment Trends Monitor Report

Jan 30, 2015 19:16 IST

United Nations Conference on Trade and Development (UNCTAD) on 29 January 2015 released Global Investment Trend Monitor Report. The report provides the global investments trend in 2014 and prospects of global investments in 2015.

The report highlights that Global Foreign Direct Investment (FDI) inflows declined by 8 percent in 2014 to an estimated 1.26 trillion US dollars due to the fragility of the global economy, political uncertainty and geopolitical risks.

In 2014, Foreign Direct Investment (FDI) flow in India increased by 26 percent to an estimated 35 billion US dollar with maximum growth in the services sector, despite the decline in global FDI inflows.

Main Highlights of the Report

  • FDI flows to developed countries dropped by 14 percent to an estimated 511 billion US dollar, which was significantly affected by large divestment in the United States
  • FDI flows to the European Union (EU) reached an estimated 267 billion US dollar, which was 13 percent increase on 2013, but is still only one-third of the 2007 peak
  • FDI flows to transition economies more than halved to 45 billion US dollar, this happened due to regional conflict, sanctions on the Russian Federation. The negative growth prospects deterred foreign investors (especially from developed countries) from investing in the region
  • FDI inflows in developing economies reached a new high of more than 700 billion US dollar, which was 4 percent higher than 2013, with global share of 56 percent
  • At the regional level, flows to developing Asia were up, to Africa remained flat, while FDI to Latin America declined
  • Cross-border Mergers and Acquisitions (M&A) rose by 19 percent, driven mainly by restructuring deals.
  • In 2014, Greenfield investment projects rose by 3 percent  

Top five FDI recipients’ country of 2014

In 2014, China was the largest recipient of FDI with an increase of 3 percent FDI. As largest recipient of FDI, China replaced the US, a position that was held by it since 1980s.

Among the top five FDI recipients in the world, four are developing economies, the rankings is:

  • China with 128 billion US dollar
  • Hong Kong with 111 billion US dollar
  • The United States with 86 billion US dollar
  • Singapore with 81 billion US dollar
  • Brazil with 62 billion US dollar

Report in context of India

In 2014 FDI flow in India increased by 26 percent to an estimated 35 billion US dollar with maximum growth in the services sector, despite the decline in global Foreign Direct Investment inflows.

Maximum growth was witnessed in services sector especially in electricity, gas, water, waste management and information and communication. This figure is one of the highest in recent years, though in 2008 FDI peaked in India with 47 billion dollars followed by 35.6 billion dollar in 2009.

FDI prospects in 2015

According to the report, FDI flows in 2015 will be negatively influenced, due to subdued global economic outlook, volatility in currency and commodity markets and elevated geopolitical risks.

The report also says FDI flows will be favoured by the strengthening of economic growth in the United States, the demand-boosting effects of lower oil prices and proactive monetary policy in the Eurozone, coupled with increased liberalization and promotion measures.

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