The latest UN Conference on Trade and Development (Unctad) Global Investment Trends Monitor reported that global foreign investment flows hit their highest point in 2015 since the 2008 financial crisis. Global FDI flows increased by 36% to reach an estimated $1,700bn. However, the report reveals that this growth was primarily driven by crossborder mergers and acquisitions, which increased by 61% in 2015, rather than greenfield investment projects. 

Increased FDI to developed countries has been the main factor fuelling this recovery, as many investors are pulling back from the developing world. Unctad reported strong growth in flows in the United States and the European Union “where FDI quadrupled, although from a historically low level in 2014”. The US bounced back from third place in 2014 to first place in terms of FDI recipient economies with an estimated $384bn in investment. Developed economies now account for 55% of global FDI inflows, according to the report.


While the numbers are positive overall, experts remain concerned that many of these investments lack “productive impact”. “Despite this growth, we remain concerned with the lack of productive investment across the sectors,” said James Zahn, Unctad director of investment and enterprise. “Global trade has been growing on the back of the increasing activity and investment of multinational corporations. However, they now appear hesitant to invest in new capacity and maintain their investment stock because of weak global demand and increasing regulatory and geopolitical risks.”

Foreign investment into developing countries did increase by 5% from 2014, reaching $741bn. Developing Asia remains the highest recipient of FDI at the regional level, receiving one-third of global inflows. “FDI into China still stands at a high level for two major reasons: economic growth is slowing down, but China remains one of the world’s fastest growing economies,” Mr Zahn noted. China’s gradual transition from manufacturing to services is also a process that is attracting foreign investment.  

At the same time, low commodities prices have resulted in weaker FDI flows into commodities-dependent regions such as Africa, Latin America and the Caribbean. “Lower commodity prices can definitely lead to lower cost of production, but the problem is that global demand is weak and leaves little room for new investment,” Mr Zahn added.