Optimism returns to global FDIs: UNCTAD Report

by Trust Matsilele 0

According to the UNCTAD’s World Investment Report 2014 foreign direct flows were expected to rise to 1.7 trillion US dollars in 2015 and 1.8 trillion US dollars in 2016 with relatively larger increases in developed countries.

However, the report noted that fragility in some emerging markets and risks related to policy uncertainty and regional instability could negatively affect the expected upturn in FDI.

(READ MORE: FDI in sub-Saharan Africa up by 4.7 per cent)

“FDI flows to developed countries increased by nine per cent to 566 billion US dollars, leaving them at 39 per cent of global flows, while those to developing economies reached a new high of 778 billion US dollars, or 54 per cent of the total,” read part of the report.

“The balance of 108 billion US dollars went to transition economies. Developing and transition economies now constitute half of the top 20 ranked by FDI inflows.”

The World Investment Report 2014 also noted FDI outflows from developing countries having reached record highs.

“Transnational corporations (TNCs) from developing economies are increasingly acquiring foreign affiliates from developed countries located in their regions,” UNCTAD said.

“Developing and transition economies together invested 553 billion US dollars, or 39 per cent of global FDI outflows, compared with only 12 per cent at the beginning of the 2000s.”

(READ MORE: Africa’s trillion dollar scandal)

The report noted that the poorest countries were becoming less and less dependent on extractive industry investment.

“Over the past decade, the share of the extractive industry in the value of greenfield projects was 26 per cent in Africa and 36 per cent in least developed countries (LDCs),” read the report.

“These shares are rapidly decreasing manufacturing and services now make up about 90 per cent of the value of announced projects both in Africa and in LDCs.”

The report reveals an encouraging trend as global foreign direct investment flows rose by nine per cent in 2013, with growth expected to continue in the years to come.