These are the findings of the UNCTAD Global Investment Trends Monitor, which noted that FDI flows to developing economies reached a new high of $759 billion, accounting for 52% of global FDI inflows in 2013. At the regional level, flows to Latin America, the Caribbean and Africa were up, while developing Asia, with its flows at a level similar to 2012, remained the largest host region in the world. On the other hand, developed countries, however, remained at a historical low (39 %) for the second consecutive year.
FDI inflows to developed countries increased by 12% to $576 billion, with such investment to the European Union increasing, while flows to the United States continued to decline.
FDI inflows to transition economies also recorded a new high of $126 billion 45% up from the previous year, accounting for 9% of global FDI inflows. Among major regional and inter-regional groupings, APEC and BRICS almost doubled their share of global FDI inflows from the pre-crisis level, the report said. APEC now accounts for more than half of global FDI flows, on a par with the G20, while BRICS jumped to over one-fifth.
In late 2012, the 10 ASEAN member states and their six FTA partners Australia, China, India, the Republic of Korea, Japan and New Zealand launched the negotiation of the Regional Comprehensive Economic Partnership (RCEP). The region have combined FDI flows of $326 billion, accounting for more than 20% of global FDI flows in recent years.
Global FDI increased by 11% in 2013 to an estimated $1.46 trillion, with the lions share going to developing countries.
Going ahead, UNCTAD forecasts FDI flows to gradually rise in 2014 and 2015, at $1.6 trillion and $1.8 trillion, respectively, largely on account of recovery in developed economies. GDP growth, gross fixed capital formation and trade are projected to rise globally over the next years. Those improvements could prompt TNCs to gradually transform their record levels of cash holdings into new investments, the report added.
However, UNCTAD has cautioned that uneven levels of growth, fragility and unpredictability in a number of economies and risks related to the tapering of quantitative easing could dampen the FDI recovery.