UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT (UNCTAD)

CONFRENCE DES NATIONS UNIES POUR LE COMMERCE ET LE DVELOPPEMENT (CNUCED)

PRESS RELEASE
EMBARGO The contents of this press release and the related Report must not be quoted or summarized in the print, broadcast or electronic media before 26 July 2011, 17:00 GMT (1 PM New York, 19:00 Geneva, 22:30 Delhi, 02:00 27 July 2010 Tokyo)

UNCTAD/PRESS/PR/2011/027 Original: English

GLOBAL FOREIGN DIRECT INVESTMENT ROSE 6% IN 2010, THOUGH STILL 37% BELOW 2007 PEAK, UNCTAD REPORT SAYS; FURTHER GROWTH SEEN FOR 2011
Geneva, 26 July 2011 Global foreign direct investment (FDI) inflows rose 6 per cent to $1.249 trillion in 2010, UNCTADs annual investment survey reports. The study says, however, that FDI flows at the end of the year were still some 15 per cent below their pre-crisis average and nearly 37 per cent below their peak in 2007. Overall, investment continues to lag behind recoveries in global industrial output and world trade, which are already back to their pre-crisis levels (figure 1). The World Investment Report 20111 (WIR 11), subtitled Non-equity modes of international production and development, was released today. UNCTAD predicts in this report that the recovery of FDI flows will continue in 2011 and will reach a total of some $1.4 to $1.6 trillion, thus returning to the pre-crisis average. Thereafter, flows are forecast to rise to $1.7 trillion in 2012 and $1.9 trillion in 2013 (figure 2). The record level of cash holdings, low rates of debt financing and rising stock market valuations of transnational corporations (TNCs) should encourage them to expand overseas, the report says. On the recipients side, ongoing corporate and industrial restructuring, privatizations resulting from fiscal rebalancing efforts and unwinding of state support programmes, and the growth of emerging economies should create new investment opportunities. However, the post-crisis business environment is still beset by uncertainties. Risk factors such as the unpredictability of global economic governance, a possible widespread sovereign debt crisis, and fiscal and financial sector imbalances in some developed countries, as well as rising

* Contacts: UNCTAD Communications and Information Unit, +41 22 917 5828, +41 79 502 43 11, unctadpress@unctad.org, http://www.unctad.org/press
1

The World Investment Report 2011: Non-equity Modes of International Production and Development (WIR11) (Sales No. E.11.II.D.2, ISBN-13: 978-92-1-112828-4) 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: publications@un.org https://unp.un.org.

UNCTAD/PRESS/PR/2011/027 Page 2

inflation and signs of overheating in major emerging market economies, may yet derail the FDI recovery. In 2010, the rise of emerging economies as new powerhouses of FDI became more apparent. Developing countries absorbed more than half of global FDI inflows for the first time (table 1). As international production and, more recently, the weight of global consumption shift towards developing and transition economies, both efficiency-seeking and market-seeking projects in those economies are on the increase. Half of the top 20 host economies for FDI in 2010 were developing and transition economies (figure 3). Their outward FDI also rose sharply in 2010, climbing by 26 per cent. These economies now account for 30 per cent of global FDI outflows. Six developing and transition economies were among the top 20 investors (figure 4). Despite the emergence of certain developing countries, FDI flows continued to decline in some of the poorest regions of the world. Flows to the Africa and South Asia, as well as to least developed countries, landlocked developing countries and small island developing States fell in 2010 (table 1). In terms of sectoral patterns, FDI in services continued its downward path in 2010. All the main service industries (business services, finance, utilities, and transport and communications) saw FDI flows fall, though at different speeds. FDI flows to the financial industry experienced one of the sharpest declines. The share of foreign investment channelled to manufacturing increased, meanwhile, and accounted for almost half of all FDI projects cross-border mergers and acquisitions and greenfield projects, which are types of manufacturing new to a country or region. Within manufacturing, flows fell in business-cycle-sensitive industries such as metals and electronics. The chemical industry, including pharmaceuticals, remained resilient through the crisis, while industries such as food, beverages and tobacco, textile and garments, and automobiles, recovered in 2010. FDI channelled to extractive industries, a sector relatively unaffected by the crisis, declined, despite the growing demand for raw materials and energy resources. The importance of TNCs to the global economy can be gauged from the indicators of international production, which showed gains in 2010 (table 2). UNCTAD estimates that sales and value added of foreign affiliates around the world reached $30 trillion and $7 trillion, respectively, in 2010. Their exports amounted to more than $6 trillion, about one third of total global exports. Worldwide TNC operations, both at home and abroad, generated value added of approximately $15 trillion in 2010 about a quarter of world gross domestic product. Among the 100 largest non-financial TNCs, 19 are state-owned. Today, there are at least 650 state-owned TNCs with an estimated 8,500 foreign affiliates. While relatively small in number less than 1 per cent of all TNCs they supplied FDI estimated at $146 billion in 2010, accounting for about 11 per cent of the global flows. Developing and transition economies are home to the majority of these firms (56 per cent), although developed countries maintain a significant number of state-owned TNCs. In contrast to the widely held perception that stateowned TNCs are largely concentrated in the primary sector (8.6 per cent), they are present in diverse industries, particularly in the services sector. From 2003 through 2010, FDI projects by state-owned TNCs made up an average of [32] per cent of total outflows from developing countries. The number of megadeals for which developing country state-owned TNCs have been responsible in the past five years is indicative of their importance. Four of six FDI projects with a value of more than $10 billion (one merger and acquisition and three greenfield investment projects) were undertaken by developing country state-owned TNCs. While there are no official statistics on the FDI stock controlled by state-owned TNCs, a rough estimate suggests that their share of global outward stock was no less than 6 per cent in 2010.
The World Investment Report and its database are available online at http://www.unctad.org/wir, http://www.unctad.org/fdistatistics and http://www.unctad.org/diae.

UNCTAD/PRESS/PR/2011/027 Page 3 Figure 1. Global FDI inflows, average 20052007 and 2008-2010 (Billions of dollars)
1969 1742 1472
~37%

2018 1177 1754 1488

~15%

1250 ~40%

1154

~22%

1175

average 2005-2007

2007

2008

2009

2010

average 2005-2007

2007

2008

2009

2010

Source: UNCTAD, World Investment Report 2011.

Figure 2. Global FDI flows, 20022010, and projection for 20112013

2500

Source: UNCTAD, World Investment Report 2011.

UNCTAD/PRESS/PR/2011/027 Page 4

Figure 3. Global FDI inflows, top 20 recipients, 20092010a (Billions of dollars)

United States (1) China (2) Hong Kong, China (4) Belgium (17) Brazil (15) Germany (6) United Kingdom (3) Russian Federation (7) Singapore (21) Australia (14) France (10) Saudi Arabia (11) Ireland (16) India (8) Canada (18) Spain (30) Luxembourg (12) Mexico (20) Chile (26) Indonesia (42) 0 5 9 15 26 36 39 35 34 34 28 32 27 25 24 36 23 21 21 20 19 15 15 13 13 20 40 60 80 100 120 140 23 26 38 48 46 43 41 71 52 53 69 95 106

228 153

2010
30

2009

Source: UNCTAD, World Investment Report 2011. a Ranked on the basis of the magnitude of 2010 FDI inflows. Note: The number in bracket after the name of the country refers to the ranking in 2009.

UNCTAD/PRESS/PR/2011/027 Page 5 Figure 4. Global FDI outflows, top 20 recipients, 20092010a (Billions of dollars)
United States (1) Germany (3) France (2) Hong Kong, China (5) China (6) Sw itzerland (11) Japan (4) Russian Federation (8) Canada (9) Netherlands (12) Belgium (156) Sw eden (14) United Kingdom (7) Spain (22) Italy (16) Singapore (18) Korea, Republic of (19) Luxembourg (17) Ireland (15) Mexico (27) 0 7 10 44 39 42 32 27 31 30 26 25 22 33 64 68 78 84 76 105 103 329 283

57 58 56 52

75

44

21 21 20 18 19 17 18 19 16 24 14 50 100 150

2010 2009

200

Source: UNCTAD, World Investment Report 2011. a Ranked on the basis of the magnitude of 2010 FDI inflows. Note: The number in bracket after the name of the country refers to the ranking in 2009.

UNCTAD/PRESS/PR/2011/027 Page 6 Table 1. FDI flows by region, 20082010 (Billions of dollars and percentage)

Source: UNCTAD, World Investment Report 2011.

FDI inflows FDI outflows FDI inward stock FDI outward stock Income on inward FDI Rate of return on inward FDI Income on outward FDI Rate of return on outward FDI Cross-border mergers and acquisitions

Sales of foreign affiliates Value-added (product) of foreign affiliates Total assets of foreign affiliates Exports of foreign affiliates Employment by foreign affiliates (thousands) Gross domestic product Gross fixed capital formation Royalties and licence fee receipts Exports of goods and non-factor services

Source: UNCTAD, World Investment Report 2011.

Region World Developed economies Developing economies Africa Latin America and the West Asia South, East and Sout South-East Europe and
Table 2. Selected indicators of FDI and international production, 19902010 (Millions of dollars and percentage)
Item Value at current prices (Billions of dollars) 20052007 1990 average 2008 2009 1 472 1 500 14 420 15 703 987 6 1 082 6 703 21 294 5 416 43 325 5 003 55 002 49 910 11 208 156 15 008 1 743 1 911 15 359 15 984 1 060 7.3 1 119 7.0 707 33 293 6 386 64 398 6 599 64 474 60 966 13 999 190 19 795 Annual growth rate or change on return (Percentage) 2008 2010 19911995 19962000 20012005 22.5 16.9 9.4 11.9 35.1 -0.5 19.9 -0.4 49.1 8.2 6.8 13.1 8.6 2.9 5.9 5.1 14.6 8.1 40.1 36.3 18.8 18.3 13.1 0.0 10.1 0.0 64.0 7.1 8.8 19.6 3.6 11.8 1.3 1.3 10.0 3.7 5.4 9.1 13.4 14.7 32.1 0.1 31.3 0.0 0.6 14.9 14.5 15.5 14.7 4.1 10.0 10.7 13.6 14.7 2009 2010 207 241 2 082 2 094 75 6.6 122 7.3 99 1 180 1 170 18 022 19 143 949 6.9 1 053 6.9 250 28 402 5 915 57 360 5 262 67 805 57 920 12 735 177 15 783 1 247 1 315 18 954 20 100 928 7.3 1 178 7.3 339 29 825 6 617 60 470 6 239 70 505 62 909 13 940 178 18 713 -11.5 -13.7 -14.2 -16.2 -11.2 0.2 -12.3 -0.4 -30.9 -32.3 -38.7 17.3 19.8 -10.5 -0.4 -5.9 -0.2 -64.7 -14.7 -7.4 -10.9 -20.3 5.2 -5.0 -9.0 -7.1 -20.3 5.7 12.4 5.2 5.0 -2.3 0.3 11.9 0.4 35.7 5.0 11.9 5.4 18.6 4.0 8.6 9.5 0.7 18.6 5 106 1 483 4 602 1 498 21 473 22 137 5 109 29 4 382 29.4 1.9 23.3 14.7 7.2 22.2 10.7 7.7 31.9

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Structurally weak, vulnera