Mixed picture for foreign investment inflows to structurally weak, vulnerable and small economies, UNCTAD report shows
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Geneva, Switzerland, (04 July 2012)
Among structurally weak, vulnerable, and small economies, foreign direct investment (FDI) inflows in 2011 dropped in least developed countries (LDCs) and small island developing States, but rebounded strongly in landlocked developing countries, UNCTAD’s World Investment Report 20121 (WIR12) reveals.
The report, subtitled "Towards a New Generation of Investment Policies", was released today.
Among the world’s 48 LDCs2, total FDI inflows declined to $15.0 billion, the lowest level in five years, due mainly to a continuous fall in FDI inflows to Angola – once the largest recipient in the group. Angola registered a decline for two years in a row because of large divestments and payments of intra-company loans, the WIR reports. The disappointing results were echoed in a substantial fall in greenfield investments – that is, investments in from-the-ground-up ventures – and in cross-border merger and acquisition (M&A) sales. Large-scale FDI projects remain concentrated in a few resource-rich LDCs.
Greenfield investments concentrated in mining, quarrying and petroleum remained the dominant form of FDI in LDCs, the report notes, although investments in the services sector are increasing, particularly in electricity, gas and water and in transport, storage and communications. About half of greenfield investments in 2011 came from developing economies, although neither the share nor the value of those investments recovered to the levels of 2008–2009. India remained the largest investor in LDCs, followed by China and South Africa.
In the 31 landlocked developing countries3, FDI increased to a record high of $34.8 billion, the WIR reports. Among total inflows to developing and transition economies, the share of landlocked developing countries increased marginally. Kazakhstan continued to lead those countries in attracting foreign investment (see figure). In Mongolia, inflows more than doubled because of large-scale projects aimed at extracting natural resources. The vast majority of inward investments continued to be greenfield investments, led by a strong recovery in investments in mining, quarrying and petroleum. The share of greenfield investments in landlocked developing countries from transition economies soared, owing to a single large-scale investment from the Russian Federation in Uzbekistan. Greenfield investments from developing economies were the highest in three years, but the share of total greenfield investments in landlocked developing countries did not change from 2010.
In the 29 small island developing States4, FDI inflows fell for the third year in a row, to $4 billion – the lowest level in six years. The minute share of this group’s FDI inflows among global FDI showed no sign of improvement. The distribution remained highly skewed, with two economies (the Bahamas, and Trinidad and Tobago) receiving the bulk (see figure). In the absence of megadeals in mining, quarrying and petroleum, the total values of cross-border M&A sales in the small island developing States dropped significantly in 2011, the WIR12 reports. In contrast, total greenfield investments reached a record high, and the share of developing economies as investors in the small island developing States advanced substantially. China was the most active in M&As, while South Africa became the largest source of greenfield investments.
Full Report - http://unctad.org/en/PublicationsLibrary/wir2012_embargoed_en.pdf
Overview - http://unctad.org/en/PublicationsLibrary/wir2012overview_en.pdf
Figure 1 - Top five recipients of FDI flows in structurally weak, vulnerable and small economies, 2010 and 2011
(Billions of dollars)
a) Least developed countries
b) Landlocked developing countries
c) Small island developing States
Source: UNCTAD, World Investment Report 2012.
Note: Countries ranked on the basis of the magnitude of 2011 FDI flows.
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- Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, Sudan, Timor-Leste, Togo, Tuvalu, Uganda, United Republic of Tanzania, Vanuatu, Yemen, Zambia.
- Afghanistan, Armenia, Azerbaijan, Bhutan, Bolivia (Plurinational State of), Botswana, Burkina Faso, Burundi, Central African Republic, Chad, Ethiopia, Kazakhstan, Kyrgyzstan, Lao People’s Democratic Republic, Lesotho, Malawi, Mali, Mongolia, Nepal, Niger, Paraguay, Republic of Moldova, Rwanda, Swaziland, Tajikistan, the former Yugoslav Republic of Macedonia, Turkmenistan, Uganda, Uzbekistan, Zambia, Zimbabwe
- Antigua and Barbuda, Bahamas, Barbados, Cape Verde, Comoros, Dominica, Fiji, Grenada, Jamaica, Kiribati, Maldives, Marshall Islands, Mauritius, Federated States of Micronesia, Nauru, Palau, Papua New Guinea, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, Seychelles, Solomon Islands, Timor-Leste, Tonga, Trinidad and Tobago, Tuvalu, Vanuatu.
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