Asia’s Growing Appetite for Global Foreign Direct Investment
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Fast growing economies in Asia took up a quarter of the world’s foreign direct investment in 2011, as its share of the investment pie increases at the expense of the European Union. which saw its share tumble from 42 percent in 2007 to 28 percent last year.
The figures come from the World Investment Report 2012 released by the United Nations Conference on Trade and Development yesterday.
Fast growing economies in Asia took up a quarter of the world’s foreign direct investment in 2011, as its share of the investment pie increases at the expense of the European Union. which saw its share tumble from 42 percent in 2007 to 28 percent last year.
The figures come from the World Investment Report 2012 released by the United Nations Conference on Trade and Development yesterday.
According to the report, East and Southeast Asian economies received $336 billion from offshore investors in 2011, a 14 percent increase in 2010, accounting for 22 percent of the world’s total FDI. Southeast Asia in particular saw inflows of $117 billion, up 26 percent, and continue to experience higher FDI growth than East Asia, although the latter was still dominant at $219 billion.
When figures from South Asia are included, Asia’s share of total FDI in 2011 is bumped up to 24.6 percent.
Compared with five years ago, total FDI in the region is up substantially from a mere 13.7 percent in 2007.
The other global investment hotspot is Latin America, where the share of FDI was 14.2 percent in 2011, up from 8.7 percent in 2007.
The report added that FDI flows to developed countries grew robustly in 2011, reaching $748 billion, up 21 percent from 2011.
[quote] Globally, FDI flows exceeded the pre-crisis average in 2011, reaching $1.5 trillion despite the global economic turmoil. However, the UN warned that “prospects for FDI continue to be fraught with risks and uncertainties” and the FDI recovery is expected to “level off in 2012 at an estimated $1.6 trillion.” [/quote]
On the other hand, inflows to Africa and the least developed countries continued on their downward trend for the third consecutive year, albeit a marginal decline. The UN report noted that “the poorest countries remained in FDI recession” in 2011, with flows to the least developed countries retreating 11 percent to $15 billion.
FDI is a key measure of how offshore investors perceive an economy and can prove to be a critical source of capital for poor economies, countries with low savings rates, and economies with current account deficits, such as Vietnam and India.
Unlike investment in a stock or bond market, FDI is sticky, which means it doesn’t flee at the first sign of a panic or a downturn.
Related Information: Foreign Direct Investment (FDI)
Related Information: Trends in Global Foreign Direct Investment
