Trending in line with a decline in greenfield project numbers globally in 2012, spending on these projects also dropped last year.

After an increase of 0.45% in 2011, the estimated capital investment resulting from FDI projects declined by 33.53% in 2012 to $565bn, according to data from crossborder investment monitor fDi Markets which was published in The fDi Report 2013, an annual report from fDi Intelligence. Slower economic growth in China in particular led companies to cut back on capital-intensive investments, a key factor behind the large decline in global capital investment. The same pattern was seen in employment, with estimated direct job creation from FDI declining by 28.8% to 1.62 million, following a 3.36% increase in 2011.


While all regions of the world experienced a decline in FDI, the decline in FDI into Africa was less than the world average and Africa increased its market share of global FDI projects from 5.56% in 2011 to 6.01% in 2012. In contrast, the global market share of western Europe fell 1.5% in 2012, due to the European debt crisis and stagnating economic growth.

Asia-Pacific: the top region for FDI

Asia-Pacific remained the leading regional destination for FDI in 2012, with 3740 projects tracked, increasing its global market share to 31.72%. Of the top five destinations in Asia-Pacific, Australia was the only country to achieve growth in project numbers, with FDI rising by 4.24%. This increase follows a small decline in FDI in Australia in 2011.

Myanmar’s experience shows the strong link between political stability and FDI. After the recent introduction of democracy, the south-east Asian country saw a dramatic increase in inward FDI, with project numbers rising from 10 to 54 in 2012, a fivefold increase. The country also experienced significant growth in capital investment and job creation in 2012.

Indonesia, the Philippines and Bangladesh also all achieved project growth of 7.64%, 11.27% and 66.67%, respectively. The excellent performance of Bangladesh indicates the global shift taking place with a re-allocation of efficiency-seeking FDI away from China and other emerging markets and towards frontier markets such as Bangladesh with their vast untapped labour pools, low costs and market opportunities.

Ireland and Turkey increase market share in Europe

While all of Europe experienced a decline in FDI, Ireland and Turkey performed better than other countries, with a much smaller decline in FDI. As a result, Ireland increased its market share of FDI in Europe to 3.78% and Turkey increased its market share to 3.42%, and entered the top 10 countries for project numbers. Ireland’s performance reflects the growing stabilisation of the Irish economy and strong growth in repeat investments by existing investors, especially from the US. The Turkish performance reflects the growing weight of the Turkish economy in Europe and internationally, and we expect Turkey to continue to rise up the ranks of the top locations in Europe.

BRIC countries retain global rankings

FDI into the BRIC countries of Brazil, Russia, India and China declined more sharply than the global average in 2012, resulting in a fall in their global market share. However, China, India and Brazil all finished in the top five most popular destinations for FDI.

Middle East major source of FDI growth in 2012

Although FDI into the Middle East fell in 2012, it was the only region to increase its volume of outbound FDI in 2012, with FDI projects from the region growing by 15.74%. United Arab Emirates enterprises led the way, increasing their outward FDI by 26.44%.

Much of the FDI into the Middle East came from within the region, as firms increasingly aim to become regional players.

Western Europe remains the leading source of FDI

Despite a decline in outward FDI, western European enterprises remained the leading source of FDI overseas, accounting for 43.12% of global FDI projects in 2012. More than 43% of western European FDI comes from within Europe. The UK and Germany accounted for 45.45% of FDI out of western Europe.

Sector highlights

The top five sectors for FDI projects in 2012 remained the same as 2011, with business and financial services; information and communications technology (ICT); transport equipment; engines, turbines and industrial machinery; and chemicals, plastics and rubber the leading sectors.

Business and financial services, along with ICT, remain the top two sectors accounting for 43.68% of global FDI projects in 2012, an increase from 39.3% in 2011. Real estate, hotels and tourism, and food, beverages and tobacco experienced an increase in market share rising to 4.6% and 4.28%, respectively. The growth in the food, beverages and tobacco sector is best reflected in its market share increase in the BRIC countries, where it accounts for nearly a quarter of all FDI.

Electronic components and semiconductors, as well as consumer electronics, consumer goods and business machines, all suffered declines with project numbers falling by 26.07% and 21.21%, respectively.

Factors behind the 2012 decline in FDI

Lacklustre economic growth in Europe, Japan and Brazil, much slower growth in China, political instability in the Middle East, and policy uncertainty in the US all negatively impacted the global FDI market. The extreme case was in Syria, with a decline of more than 90% in FDI projects in 2012.

Last year was also notable for the continued recovery from natural disasters, such as the earthquake, tsunami and nuclear disaster in Japan and flooding in Thailand. These factors continued to negatively impact FDI in these countries.

To download a complimentary copy of The fDi Report 2013 click here.