Worldwide FDI capital inflows were up by 11% in 2013, and reached the annual pre-crisis average, according to the United Nations Conference on Trade and Development (Unctad). As Unctad's latest Global Investment Monitor shows, FDI inflows – including greenfield projects as well as mergers and acquisitions and portfolio investments, were estimated at $1460bn in 2013. This compared to the $1494bn recorded on average between 2005 and 2007.
Unctad notes that this rebound can be largely attributed to the growing role of developing countries in attracting FDI. According to Unctad's report, $759bn was invested last year in emerging economies, marking an all-time high and accounting for 52% of FDI flows worldwide.
Asia still remains the largest destination for FDI in the world, but crossborder inflows to the continent flattened in 2013. Meanwhile, investments in Africa, Latin America and the Caribbean were up in the year. Inflows to transition economies, defined by Unctad as south-east Europe and the Commonwealth of Independent States, were also on the up, reaching a record high with investments estimated at $126bn.
Investments into developed economies increased by 12%, but the $579bn invested represents jsut 44% of the figure recorded in 2007, when inward investment to developed economies was at its peak. Unctad notes that the developed world's global share of FDI inflows – 39% – is a historic low.
Inflows to the US continued to decline in 2013, although the country still remains the world's top location for FDI. Total capital flows to North America increased by 6% in 2013, thanks to Canada, which saw a 49% increase in capital inflows. Unctad notes that the country's performance is largely down to intra-company loans to foreign affiliates in the country.
As investment inflows to Belgium, Ireland, the Netherlands and Luxembourg recovered from their sharp contraction in 2012, the EU recorded a healthy 38% rebound in FDI capital inflows in 2013. Among other countries that spearheaded the rebound in Europe were Germany (up by 392% to 32.3bn) and Spain (up by 37% to $ 37.1bn).
Unctad's experts predict that FDI flows will rise gradually in 2014 and 2015, to $1600bn and $1800bn, respectively. “Global economic growth gains momentum, which may prompt investors to turn their cash holdings into new investments,” conclude the authors of Global Investment Monitor.