The US attracted the largest capital inflows, followed by the UK and France. Record levels were received in Africa, Asia and in south-east Europe and the Commonwealth of Independent States. (Unctad includes mergers and acquisitions activity in its FDI statistics.)
Inflows to developed countries in 2006 rose by 48% to reach $800bn. This corresponds to a doubling of inflows in 2004. The US recovered its position as the largest single host country for foreign investment, overtaking the UK, to which inflows also grew in 2006. The 25 countries of the EU together accounted for about 45% of total inflows in 2006. For Japan, on the other hand, divestments outpaced new investments, resulting in negative inflows for the first time since 1989.
In Africa, inflows surged to a record level of $38bn, mainly as a result of large investments in oil-rich economies. But inflows remain highly concentrated, and most low-income countries that are less well-endowed with natural resources continue to receive little investment.
Inflows to Latin America and the Caribbean slowed down somewhat in 2006. Mexico and Brazil, in that order, remained the largest recipient countries, with stable inflows in Mexico and an increase of 6% in Brazil. Chile’s inflows rose by 48%, mainly as a result of larger reinvested earnings in the mining industry.
Inflows to Asia and Oceania maintained their upward trend, reaching a high of $230bn, up 15% from 2005. Thus, the region’s share of total investment to developing countries rose from 59% to 63%. China and Hong Kong remained the leading destinations, followed closely by Singapore with about $32bn of inflows, an unprecedented level. India also received record inflows. The inflows to the Republic of Korea have been revised upwards since the release of Unctad’s estimates, as FDI of almost $2bn was noted for the first 11 months of 2006.
Turkey and oil-rich Gulf states continued to attract most of the inflows into their region, the majority targeted at energy-related manufacturing and services.