fDi Report 2013 - Executive Summary


Executive summary

The slow recovery in greenfield FDI in 2011 ground to a halt in 2012, with the second biggest decline in FDI since the start of the world recession. All regions of the world experienced a decline in FDI. The main exceptions were Chile, Spain, Indonesia, Poland and Oman, all of which experienced strong growth in inward investment projects.

Chile replaced Brazil this year as the star performer of 2012. Investment to Chile is driven by sustained 5%+ GDP growth rates and, in 2012, an influx of renewable energy investments attracted by Chile‚Äôs excellent conditions for solar power and electricity demand from the mining sector. 

Global snapshot

Within North America, most states experienced a decline in FDI with Michigan the outstanding exception achieving a 60% growth in FDI projects. Alabama also achieved strong growth. Their excellent performance reflects the rebound of the automotive sector in the US, which was the only major sector with a growth in FDI in 2012.

This edition of the fDi Report has a special focus on the BRIC economies and on tax and FDI. The focus on the BRIC economies shows that while they have in recent years attracted over 22% of global FDI projects, their share declined in 2012 to 17.6%. FDI into China, India, and Russia peaked in 2008 and has not recovered since. FDI into Brazil, after a record high in 2011, experienced a decline in 2012. The number of FDI projects recorded in China and Russia in 2012 was the lowest level in the last decade. With Brazil struggling to regain growth, Russia meddling along, and growth levels in China and India falling we expect the market share of BRIC in global FDI to continue to decline in 2013.

The special focus on tax and FDI shows that multinational enterprises (MNEs) minimise their tax burden through their overseas operations and provides new evidence indicating the strong link between corporate tax rates and FDI performance. Governments face a huge challenge in ensuring MNEs pay the tax due without undermining their attractiveness for FDI. Coordinated multilateral action would seem the only way to achieve this.

To read the full executive summary download the report.