Global FDI inflows reach record high

Despite turmoil in the world economy, global Foreign Direct Investment (FDI) inflows rose by 17 percent in 2011, to $1.5 trillion, surpassing their pre-crisis average, based on preliminary UNCTAD estimates, the organisation said.

Developing and transition countries continued to account for half of global FDI in 2011 as their inflows reached a new record high, driven mainly by investments in Latin America (up 35 percent) and in transition economies (up 31 percent). Africa, the region with the highest number least developed countries, continued to experience a decline in FDI. Early estimates show that the share of inflows to Africa dropped by a further 0.6 percent, to 3.6 percent of world FDI flows.

Inflows to developed countries rose last year, largely due to cross-border mergers and acquisitions. But there was no expansion of investment in productive assets through greenfield projects.

UNCTAD estimates that FDI flows will climb moderately in 2012 to around $1.6 trillion, but will remain short of the all-time peak of $2 trillion reached in 2007.

However, the organisation says the fragile recovery of the world economy in 2011 - with growth tempered by the debt crisis in developed countries, the uncertainties surrounding the future of the euro, and rising financial market turbulence - will have an impact on FDI flows in 2012. Both cross-border merger

s and acquisitions and greenfield investments slipped in the last quarter of 2011, UNCTAD figures indicate. All these factors suggest that significant risks and uncertainties for further FDI growth in 2012 remain in place.