Global FDI outflows increased by 16% in 2011 to an estimated $1660bn, surpassing the pre-crisis levels of 2007, according to figures released by the UN Conference on Trade and Development (Unctad).
This growth was due in large part to crossborder mergers and acquisitions and to the increased cash reserves kept in foreign affiliates, Unctad's Global Investment Trends Monitor states. The report notes that much-needed direct investment in new productive assets through greenfield investment projects or capital expenditures in existing foreign affiliates appeared to be limited.
Outward FDI from developed countries increased by 25% in 2011, exceeding $1230bn, with the EU, North America and Japan all contributing to the growth. Meanwhile, FDI outflows from developing countries decreased by 7%, mainly due to significant declines in outward FDI from Latin America and the Caribbean. As a result, the share of developing and transition economies in global FDI outflows declined from 31% in 2010 to 26% in 2011. Nevertheless, outward FDI from developing and transition economies remained important, reaching the second highest level ever recorded.
Prospects for FDI outflows in 2012 continue to improve, but they remain guarded due to the fragility of the global economic recovery, the report says.
Meanwhile, fDiIntelligence's annual figures show that the number of greenfield FDI projects increased by 5.6% in 2011, larger than the 3% increase in 2010. After declining by 14.5% in 2010, the estimated capital investment associated with greenfield projects grew by 1.2% in 2011 to $860bn, indicating the beginning of a recovery in more capital-intensive sectors.
Unctad's figures include mergers and acquisitions and other types of investment not included in fDiIntelligence's greenfield data.