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International investment to and from developed economies rose in 2011 but is now slowing, UNCTAD report finds
World Investment Report 2012 says developed countries are still below pre-crisis levels of foreign direct investment

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05 July 2012, 19:00 Geneva Time, 17:00 GMT, Geneva Time

Geneva, Switzerland, (05 July 2012)

Inflows of foreign direct investment (FDI) to developed countries – which bottomed out in 2009 – accelerated their recovery in 2011 to reach $748 billion, up 21 per cent from the previous year, UNCTAD’s World Investment Report 20121 notes.

The recovery from 2010 has nonetheless made up only one fifth of the ground lost during the financial crisis of 2008–2009. Inflows remained at 77 per cent of the pre-crisis three-year average (2005–2007). Inflows to Europe, which had declined until 2010, showed a strong turnaround while robust recovery in the United States of America continued. While Australia and New Zealand attracted significant volumes, Japan saw a net divestment for the second successive year. The United States and Belgium, respectively, maintained their positions as the largest- and second-largest recipients of FDI among the developed countries (see figure 1, part a).

Recovery of outward FDI from developed countries gathered pace in 2011; the outflows exceeded $1.2 trillion, a level comparable to the pre-crisis average over 2005–2007, the report says. The robust growth (up 25 per cent from 2010) came on the strength of outward FDI from the United States, which reached $397 billion – above the country’s 2007 peak – and from Japan, which doubled its level of 2010. The picture in Europe is more mixed. While outward FDI from the United Kingdom of Great Britain and Northern Ireland almost tripled (up 171 per cent) to $107 billion, flows from Germany ($54 billion) dropped by half, and the Netherlands ($32 billion) by nearly as much. Outflows from Denmark and Portugal are at record highs, meanwhile. Japan became the second largest investor among developed countries after the United States (see figure 1, part b).

Despite the intensified eurozone crisis, total FDI flows into and out of the four most affected countries – Greece, Italy, Portugal and Spain – appear to show little impact, although underlying variables show signs of distress, the report says. Reinvested earnings were down in all four countries and foreign transnational corporations withdrew debt capital from their foreign affiliates in those countries. Data on FDI outflows suggest that transnational corporations based in those countries may have transferred some assets to foreign affiliates (or left assets there in the form of reinvested earnings).

Developed countries’ recovery in incoming and outgoing FDI will be tested severely in 2012, the report predicts. Forecasts based on economic fundamentals suggest inflows will be holding steady in North America and managing a modest increase in Europe. However, the increasing shares of intra-company loans and reinvested earnings make FDI flows volatile and hard to predict, especially in Europe. Data for developed countries show a fall of more than 60 per cent in cross-border sales of mergers and acquisitions and 76 per cent in cross-border purchases thereof over the first five months of 2012. Announcement-based greenfield data – that is, statistics on from-the-ground-up investments in new ventures – show the same tendency (down 24 per cent).



Figure 1 - Top five recipients and sources of FDI flows in developed countries, 2010 and 2011 (Billions of dollars)

a) Inflows


b) Outflows


Source: UNCTAD, World Investment Report 2012.
Note: Countries ranked on the basis of the magnitude of 2011 FDI flows.

End Notes
  1. The World Investment Report 2012: Towards a New Generation of Investment Policies (WIR12) (Sales No. E.12.II.D.3, ISBN-13: 978-92-1-112843-7) may be obtained from United Publications Sales and Marketing Office at the address mentioned below or from United Nations sales agents throughout the world. Price: US$ 95 (50% discount for residents of developing countries, and 75% discount for residents of least developed countries). This price is for a copy of the printed Report and an accompanying CD-ROM. Customers who would prefer to purchase the Report or the CD-ROM separately, or obtain quotations for large quantities should consult the sales offices. Orders or queries should be sent to: United Publications Sales and Marketing Office, 300 E 42nd Street, 9th Floor, IN-919J New York, NY 10017, United States. tel.: +1 212 963 8302, fax: +1 212 963 3489, e-mail:,

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