UNCTAD reports record world foreign direct investment flows in 2000

World foreign direct investment (FDI) inflows increased by 18 per cent in 2000 to a record $1.3 trillion, according to figures released today by the United Nations Conference on Trade and Development (UNCTAD).

UNCTAD said in a statement that FDI flows had risen continuously since 1991, marking the longest period of uninterrupted growth in 30 years.

Among the three groups of economies (developed countries, developing countries and Central and Eastern Europe), the developed countries last year experienced the highest growth of FDI inflows (21 per cent), exceeding $1 trillion. The rise was again fuelled by cross-border mergers and acquisitions.

Record levels were also set for inflows into developing countries and Central and Eastern Europe, which were up by about 8 per cent ($240 billion) and 9 per cent ($25 billion), respectively. However, each group's share in world FDI inflows continued to slide downwards. For the developing world, the share was the lowest in a decade.

Although the stagnation of FDI flows to developing countries in 1997-98 is over, last year's growth in these flows was led by Asia only, particularly Hong Kong, China; flows to Africa and Latin America and the Caribbean actually declined. The general developing country slump was felt most sharply in the latter region, where flows were down 22 per cent, to $86 billion. The slowdown was concentrated in Argentina and Chile, where three important cross-border acquisitions in 1999 raised inflows to record levels that could not be sustained in 2000. Brazil, with inflows of $34 billion, was the largest recipient.

The World Investment Report 2001, to be launched by UNCTAD on 18 September, will analyze these estimates further and provide details at the subnational, country, regional and international levels. The main theme of this year's report is how FDI's contribution to development can be enhanced through more and deeper linkages between foreign affiliates and local enterprises.