Poor, emerging nations make first with world investment: UN

17th January 2011, Comments 0 comments

Developing and emerging nations attracted the lion's share of the world's foreign direct investment of more than one trillion dollars for the first time last year, a UN agency said on Monday.

Fresh estimates from the UN Conference on Trade and Development showed that overall global foreign direct investment (FDI) inflows grew by just 0.7 percent to 1.12 trillion dollars in 2010.

"The bad news is that FDI is still stagnant," despite the global economic recovery and output returning to pre-crisis levels, said UNCTAD economist James Zhan.

"The good news is that FDI to developing countries and economies in transition has for the first time in history exceeded the investment flows to developed countries," he told reporters.

FDI is a measure of corporate investment across borders, including items such as new "greenfield" plants or business abroad, additional investment in foreign subsidiaries and mergers or acquisitions.

Worldwide it remains about one quarter below the levels recorded before the global financial crisis due to the slow recovery in wealthy nations, Zhan said.

Instead, developing nations in Asia and Latin America offset a further decline in the industrialised world, according to UNCTAD's estimates, while investment in Africa fell 14 percent in 2010.

UNCTAD forecast a rise in global FDI flows to 1.30 to 1.50 trillion dollars in 2011.

Zhan estimated that transnational corporations had accumulated up to five trillion dollars in investable funds but were reluctant to release them because of the uncertain economic climate.

A recovery in global FDI "will depend very much on a steady recovery of the developed economies," he said.

Last year, China crossed the symbolic 100 billion dollar barrier by attracting FDI inflows of 101 billion dollars, an increase of more than six percent, according to the UNCTAD Investment Trends Monitor.

Flows to Latin America grew by more than one fifth to 141.1 billion dollars.

But foreign corporate investment in India fell by nearly one third to 23.7 billion dollars, less than one quarter of the amount garnered by China.

FDI to Africa fell by an average of 14 percent to 50 billion dollars, especially in two of the continent's largest economies, Nigeria, down 60 percent, and South Africa, down 78 percent.

The United States remained the top national destination for FDI after a post crisis rebound, gaining 43 percent to 186.1 billion dollars. That nonethless was half the amount invested there before the crisis, said Zhan.

Western and central Europe dropped more than a fifth below the levels reached in 2009, attracting 289.8 billion dollars of FDI.

© 2011 AFP

0 Comments To This Article