In spite of the economic turmoil that shook countries last year, global foreign direct investment (FDI) rose by 17 per cent, according to a United Nations report released, which predicts it will continue to increase this year but warns of the risks posed by the frail economic climate.
The report, authored by the UN Conference on Trade and Development (UNCTAD), highlights the increase in FDI in both developed and developing countries as well as transition economies.
The 2011 increase in FDI flows was no longer driven by South, East and South-East Asia (which saw an increase of 11 per cent), but rather by Latin America and the Caribbean (increase of 35 per cent) and by transition economies (31 per cent). Africa, the region with the most least developed countries (LDCs), continued its decline in FDI inflows.
After three years of consecutive decline, inflows to developed countries rose last year, reaching an estimate $753 billion, up 18 per cent from 2010, largely due to cross-border mergers and acquisitions.
However, FDI declined in Africa, the region with the highest number of least developed countries. The report shows that the share of inflows to Africa dropped by 0.6 per cent, to a total of 3.6 per cent of global FDI flows.
UNCTAD estimates that FDI flows will continue to climb moderately in 2012 to around $1.6 trillion, but will remain short of the all-time peak of $2 trillion reached in 2007. It also warned that economic uncertainty could negatively affect FDI growth.