United Nations Conference on Trade and Development (UNCTAD) on 24 June 2015 released the World Investment Report 2015 (WIR15) titled Reforming International Investment Governance.
The WIR15 delineated the investment trends at the global, regional and country level during 2014 and offered a comparative perspective across the space and time.
Highlights of World Investment Report 2015
• In 2014, Global Foreign Direct Investment (FDI) inflows fell by 16 per cent to 1.23 trillion US dollars mostly because of the fragility of the global economy, policy uncertainty for investors and elevated geopolitical risks. However, they are projected to grow by 11 per cent to 1.4 trillion US dollars in 2015.
• Inward FDI flows to developing economies reached their highest level at 681 billion US dollars with a 2 per cent rise. China became the world’s largest recipient of FDI and among the top 10 FDI recipients in the world, 5 are developing economies.
• Despite a revival in cross-border mergers and acquisitions (M&As), 399 billion US dollars during 2014, overall FDI flows to developed countries declined by 28 per cent to 499 billion US dollars. They were significantly affected by a single large scale divestment from the USA.
• Investments by developing-country multinational enterprises (MNEs) also reached a record level. They now invest abroad more than any other MNEs.
• Nine of the 20 largest investor countries were from developing or transition economies. MNEs of developing countries continued to acquire developed country foreign affiliates in the developing world.
• The groups of countries negotiating the Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP) saw their combined share of global FDI inflows decline. However, ASEAN (up 5 per cent to 133 billion US dollars) and the Regional Comprehensive Economic Partnership (RCEP) (up 4 per cent to 363 billion US dollars) bucked the trend.
• In 2012, services accounted for 63 per cent of global FDI stock, more than twice the share of manufacturing. The primary sector represented less than 10 per cent of the total.
• In 2014, announced Greenfield investment declined by 2 per cent to 696 billion US dollars. Developing countries continued to attract two thirds of announced Greenfield investment.
• International production, production by MNEs, rose in 2014 generating value added of approximately 7.9 trillion US dollars.
• Developing Asia (up 9 per cent) saw FDI inflows grow to historically high levels. They reached nearly half a trillion dollars in 2014, further consolidating the region’s position as the largest recipient in the world.
• In South Asia (up 16 per cent to 41 billion US dollars), FDI has increased in manufacturing, including in the automotive industry.
Investment scenario in India during 2014
FDI flows: While inward FDI was pegged at 34.4 billion US dollars, outward FDI was 9.8 billion US dollars. There was an increase of 6.3 billion US dollars and 10.3 billion US dollars in inward inflows when compared to that of 2013 and 2014 respectively.
As a percentage of gross fixed capital formation, inward flows and outward flows stood at 5.9 percent and 1.7 percent respectively.
Though India attracted around 80 percent of total inward FDI inflows of South Asia (41.1 billion US dollars), it was way behind 128.5 billion US dollars attracted by China.
FDI stock: While total inward FDI stock was 252.3 billion US dollars (12.3 percent of GDP), outward FDI stock was 129.5 billion US dollars (6.3 percent of GDP) during 2014.
Cross border M&As: While, net sales were pegged at 5.8 billion US dollars, net purchases were 1 billion US dollars during 2014.
Greenfield investment: While India attracted 24.9 billion US dollars, out of 26.3 billion US dollars in South Asia, as a source it invested 13.2 billion dollars abroad in Greenfield projects during 2014. However, India was way behind China that attracted 77.4 billion US dollars during the same period.
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What: Released by UNCTAD
When: 24 June 2015