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Foreign Investment Fell Worldwide in 2014
World Economy

Foreign Investment Fell Worldwide in 2014

Global Foreign Direct Investment inflows in 2014 declined 16% to $1.2 trillion, according to this year’s newly released World Investment Report from the United Nations Conference on Trade and Development.
The UNCTAD report pointed to the fragility of the global economy, policy uncertainty for investors and elevated geopolitical risks as factors contributing to the drop in FDI. New investments were also offset by some large divestments, IPS reported.
However, FDI rose slightly in developing economies, which extended their lead in global inflows of investment. China is now the largest global recipient of FDI.
Released just ahead of the third international conference on financing for development in Addis Ababa in mid-July, the report concluded that reforming international investment governance is key to building an enabling environment for investment, maximizing the chances of reaching ‘financing for development’ targets to be discussed at the conference.
West Asia maintained its downward trend in FDI in 2014 for the sixth consecutive year, decreasing by 4% to 43 billion dollars. The report describes a succession of crises that have hit the region, including the global economic crisis and an eruption of political unrest leading to conflict in some countries, which have contributed to the continuous fall.

 Positive Report
Elsewhere in South, East, and South-East Asia, the report was more positive. Inflows to South Asia rose to $41 billion in 2014, primarily owing to good performance by India, while inflows to East Asia rose by 12% to $248 billion, and those to South-East Asia experienced a 5% increase, to $133 billion. China’s boost was driven by an increase in FDI to the services sector, while FDI fell in manufacturing, especially in industries that are sensitive to rising labor costs.
Developing economies as a group attracted $681 billion worth of FDI and remain the leading region by share of global investment inflows. Among the top 10 FDI recipients in the world, half are developing economies: Brazil, China, Hong Kong (China), India and Singapore.
Developed economies, however, recorded a 28% decline in inflows last year. This figure was greatly affected by the single mega divestment by Vodafone of its Verizon Wireless business in the United States. The Vodafone deal was indicative of a general trend in merger and acquisition activity which saw divestment deals rising to one out of every two mergers and acquisitions.

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