United Nations Conference on Trade and Development (UNCTAD) on 24 June 2014 released its World Investment Report 2014.
The Report reveals an encouraging trend: after a decline in 2012, global foreign direct investment flows rose by 9 per cent in 2013, with growth expected to continue in the years to come.
Main Highlights of the Report
- After the 2012 slump, global FDI returned to growth, with inflows rising 9 percent in 2013, to 1.45 trillion dollars.
- UNCTAD projects that FDI flows could rise to 1.6 trillion dollars in 2014, 1.7 trillion dollars in 2015 and 1.8 trillion dollars in 2016, with relatively larger increases in developed countries.
- FDI flows to developed countries increased by 9 percent to 566 billion dollars, leaving them at 39 per cent of global flows
- FDI flows to developing economies reached a new high of 778 billion dollars, or 54 per cent of the total.
- The balance of 108 billion dollars went to transition economies.
- Developing and transition economies now constitute half of the top 20 ranked by FDI inflows.
- Developing and transition economies together invested 553 billion dollars, or 39 per cent of global FDI outflows, compared with only 12 per cent at the beginning of the 2000s.
- Mega-regional groupings shape global FDI. The three main regional groups currently under negotiation (TPP, TTIP, RCEP) each account for a quarter or more of global FDI flows, with TTIP flows in decline, and the others in ascendance.
- Asia-Pacific Economic Cooperation (APEC) remains the largest regional economic cooperation grouping, with 54 per cent of global inflows.
- The poorest countries are less and less dependent on extractive industry investment. Over the past decade, the share of the extractive industry in the value of greenfield projects was 26 per cent in Africa and 36 per cent in LDCs.
- Manufacturing and services now make up about 90 per cent of the value of announced projects both in Africa and in LDCs.
- Private equity FDI is keeping its powder dry. Outstanding funds of private equity firms increased to a record level of more than 1 trillion dollars. Their cross-border investment was 171 billion dollars, a decline of 11 per cent, and they accounted for 21 per cent of the value of cross-border mergers and acquisitions (M&As).
- State-owned TNCs are FDI heavyweights. UNCTAD estimates there are at least 550 State-owned TNCs – from both developed and developing countries – with more than 15000 foreign affiliates and foreign assets of over 2 trillion dollars. FDI by these TNCs was more than 160 billion dollars in 2013.
- FDI from State-owned TNCs, although constitutes less than 1 per cent of the universe of TNCs, but they account for over 11 per cent of global FDI flows.
India and World Investment Report 2014
- India slipped to the fourth position in the latest ranking of most favoured destinations for investment by transnational corporations.
- On the other hand, China retained its top position as the world's most attractive investment destination followed by the US and Indonesia at second and third place
- In 2013, India was the world's third most attractive destination for investment by transnational corporations. India was the second most favoured investment destination in 2005, 2006, 2007, 2008 and 2010.
- FDI inflows into India grew by 17 percent to 28 billion dollars in 2013.
- India was ranked 14th among the top 20 global economies, receiving the maximum FDI in 2013.
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