The UN Conference on Trade and Development (UNCTAD) on Thursday reported that foreign investment in developing and transition economies rose to US$745 billion in the first half of 2013, up some 4 per cent over the same period last year.
PANA in New York, reports that the October edition of UNCTAD’s Global Investment Trends Monitor noted that while developing and transition economies absorbed a record share nearly 60 per cent of global foreign direct investment (FDI) inflows during the period, flows to developed countries declined.
It stated: “Cross-border mergers and acquisitions and large retained earnings kept in foreign affiliates were a driving force behind the current global FDI growth, rather than investment in new productive assets through greenfield investment projects.”
It noted that in developing and transition economies, the increase was driven by acquisitions in Central America and the Caribbean, as well as record inflows into Russia.
According to the report, although flows to developing Asia fell slightly, the region continued to absorb more than half of the FDI directed to developing economies as a group, and one quarter of global FDI flows.
UNCTAD said that the fall in developed countries was mainly caused by declines in the major host countries including the US, France and Germany.
It said that the United Kingdom remained an exception, continuing its upward trend in FDI attraction, and becoming the world’s largest recipient of FDI in the period.
The agency also estimated that 2013 FDI flows would remain close to the 2012 level, despite some improvements in macroeconomic conditions in developed economies.
“In addition to risks related to the Euro area and the so-called ‘fiscal cliff’ in the US, the transition to a slower growth pattern in some emerging markets and weaker consumer demand in developed countries might have a negative impact on FDI flows this year,” it said.
Looking further ahead, UNCTAD forecasts that global FDI flows are poised to increase in 2014.