By IANS
Geneva : Global foreign direct investment (FDI) grew to an estimated $1.5 trillion in 2007, the UN Conference on Trade and Development (Unctad) has said.
“Increased corporate profits and an abundance of cash boosted the value of the cross-border mergers and acquisitions that constitute a large portion of FDI flows,” the UN agency said Wednesday.
It noted that the financial and credit crisis that began in the latter half of 2007 has not affected the overall volume of FDI inflows.
Last year FDI flows to developed countries grew for the fourth year in a row to $1 trillion, with the US retaining its spot as the largest single recipient.
At the same time, the EU as a whole continued to be the largest host region, attracting almost 40 percent of total FDI flows in 2007.
Foreign investment flows to developing countries and transition economies rose last year by 16 percent and 41 percent respectively to new record levels. In addition, FDI to Latin America and the Caribbean rose by 50 percent to a record $126 billion, with major economies like Brazil, Chile and Mexico witnessing a doubling of inflows.
In addition, FDI to South-East Europe and the erstwhile Soviet republics increased significantly by 41 percent to $98 billion, and inflows to South, East and South-East Asia continued upward reaching a new high of $224 billion.
Investment remained “relatively strong” last year in Africa, where “an unprecedented level of inflows ($36 billion) was supported by a continuing boom in global commodity markets,” the report said.
However, the agency noted that overall FDI flows declined by 12 percent in the Middle East, adding that “Turkey and oil-rich Gulf states continued to attract the most, but geopolitical uncertainty in parts of the region affected overall flows”.
While 2007 posted record highs for many regions, the outlook for this year is more modest.
“Continuing global external imbalances, sharp exchange-rate fluctuations, rising interest rates, and increasing inflationary pressures, as well as high and volatile commodity prices, pose risks that may have a chilling effect on global FDI flows,” Unctad warned.