FDI continues to lag behind recoveries in global industrial output and world trade, which are already back to pre-crisis levels, according to UNCTAD’s World Investment Report 2011. While global FDI rose a modest 5% in 2010, figures are still 37% below their 2007 peak. However, the report predicts the recovery in FDI will continue in 2011 and return to the pre-crisis average.
The theme of this year's World Investment Report was non-equity modes of international production and development. The report presents original, ahead-of-curve analyses on why and how non-equity modes (NEMs), such as contract manufacturing, services outsourcing, contract farming, franchising and licensing, are increasingly used by multinational corporations in managing their global value chains.
The report concludes that NEMs represent a highly significant “middle way” between FDI and trade that could shape patterns of international trade and trajectories of development. In 2010, cross-border NEM-related activities generated more than $2000bn in sales. NEM enterprises employed 14 million to 16 million workers in developing countries, and in some industries they accounted for 70%-80% of global exports.
The report also examined the drivers behind the rise of NEMs, their scale, scope and development impact, and the policy implications that arise.