Global foreign direct investment (FDI) outflows rose by 16 per cent in 2011 to an estimated US$1.66 trillion, surpassing the pre-crisis levels of 2007, UNCTAD’s latest Global Investment Trends Monitor reports. This growth was due in large part to cross-border mergers and acquisitions and to increased amounts of cash reserves kept in foreign affiliates, the Monitor, No. 9, says. The report notes that much-needed direct investment in new productive assets through greenfield investment projects or capital expenditures in existing foreign affiliates appeared to be limited.
Outward FDI from developed countries rose by 25 per cent in 2011, exceeding US$1.23 trillion, with the European Union (EU), North America, and Japan all contributing to the growth, the Monitor says. Meanwhile, FDI outflows from developing countries fell by 7 per cent mainly due to significant declines in outward FDI from Latin America and the Caribbean. As a result, the share of developing and transition economies in global FDI outflows declined from 31 per cent in 2010 to 26 per cent in 2011. Nevertheless, outward FDI from developing and transition economies remained important, reaching the second highest level ever recorded.
Prospects for FDI outflows in 2012 continue to improve since the depth of the crisis, but they remain guarded due to the fragility of the global economic recovery, the Monitor says.