The slow recovery in greenfield FDI in 2011 ground to a halt in 2012, with the second biggest decline in FDI since the start of the global economic recession, according to The fDi Report 2013, an annual report from fDi Intelligence recapping greenfield investment trends for the previous year.

Data from fDi Markets, a crossborder investment tracker, shows that all global regions experienced a decline in FDI. The main exceptions were Chile, Spain, Indonesia, Poland and Oman, all of which experienced strong growth in inward FDI.

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Chile replaced Brazil in the year as the star performer. Investment into Chile is driven by sustained 5%-plus GDP growth rates and an influx of renewable energy investments attracted by Chile’s excellent conditions for solar power and electricity demand from the mining sector.

In North America, most states and provinces experienced a decline in FDI, with Michigan the outstanding exception achieving a 60% growth in FDI projects. Alabama also achieved strong growth. The two states’ excellent performances reflect the rebound of the automotive sector in the US.

The fDi Report 2013 has a special focus on the BRIC economies of Brazil, Russia, India and China. In recent years these countries have attracted more than 22% of global FDI projects, however, their share declined in 2012 to 17.6%. FDI into China, India and Russia peaked in 2008 and has not recovered since.

FDI into Brazil, after a record high in 2011, experienced a decline in 2012. The number of FDI projects in China and Russia in 2012 was the lowest in the past decade. With Brazil struggling to regain growth, Russia muddling along, and growth levels in China and India falling, fDi expects the market share of BRICs in global FDI to continue to decline in 2013.

The fDi Report also focuses on tax and FDI, showing that multinational enterprises minimise their tax burden through overseas operations and giving new evidence of the strong link between corporate tax rates and FDI. Governments face a huge challenge in ensuring these firms pay the tax due without undermining their country’s attractiveness for FDI. Coordinated multilateral action would seem the only way to achieve this.

In terms of fDi Intelligence's FDI forecast for 2013, the picture is pretty grim. World economic growth is expected to slow in 2013 and with continued political and economic uncertainty around the world a substantial decline in FDI can be expected in 2013 of the magnitude of 20%.

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