Caribbean, Central America show greatest increases in foreign direct investment
According to an UNCTAD Global Investment Trends Monitor report released last month, the world’s developing economies have now earned 52 percent of 2013's global FDI inflows. The rise in FDI in developing economies was driven largely by increases in the Caribbean and Latin America, as well as in Africa. Developing Asia’s FDI remaining at the same level as 2012. Mainland China's developing economy now holds the second spot worldwide in global FDI flows, at US$159 billion.
The Caribbean and Latin America region's 2013 results marked its fourth consecutive year of FDI increases, with an 18 percent increase in FDI inflows, to US$294 billion.
Within the Caribbean and Latin America region, Central America and the Caribbean bloc showed the greatest FDI increases. The Caribbean bloc’s FDI inflows rose by 38 percent over its 2012 figures. Central America overtook South America’s FDI inflows by achieving a 93 percent increase in FDI over the region’s 2012 results. UNCTAD attributed that dramatic rise primarily to the US$18 billion acquisition of Grupo Modelo in Mexico.
South America fell 7 percent from the previous year, the result of dropping commodities prices. Brazil continued to be the largest South American FDI recipient at 47 percent FDI. Latin America as a whole has now attained a level of FDI inflows similar to that of Europe.
The developing economies group also saw the rise of M&A sales to pre-global financial crisis levels. Cross border M&A sales rose by five percent to US$337 billion, with M&A sales values for developing economies reaching $88 billion.
While the 38 developed economies' 2013 FDI inflows rose as a whole by 12 percent over 2012, they accounted for only 39 percent of 2013 global FDI inflows. FDI to Europe increased by 11.6 percent to US$296 billion, while flows to the U.S. have continued to decline (by US$9 billion). However, the U.S. still ranks number-one worldwide in FDI inflows.
The biggest news for the transitioning economies' category was the Russian Federation reaching the third-highest rank in global FDI, at US$94 billion.
With several economies now at or near pre-financial crisis FDI levels, UNCTAD’s report predicts a continuing gradual recovery in global FDI for 2014-15, reaching as much as US$1.6 trillion by 2014. That forecast assumes continued recovery, rise in GDP growth, gross fixed capital formation and increases in trade.