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The UK has become the world’s largest recipient of Foreign Direct Investment

In the first half of 2013, the UK received an inflow of Foreign Direct Investment (FDI) of $75 billion, which put the UK in first place, ahead of China with $67 billion and the US with $66 billion.

 

The UK continued its upward trend in attracting FDI

The UK continued its upward trend in attracting FDI

Overall, global FDI inflows were an estimated $745 billion in the first half of 2013, which was 4% higher than in 2012, according to the Global Investment Trends Monitor just published by UNCTAD.

 

However, the figures show that there was a diverging trend between developing and transition economies and developed countries. Flows to developed countries actually declined, but this was more than offset by flows into developing and transition economies, which actually accounted for over 60% of global FDI flows. This was a record share.

 

Acquisitions in Central America and the Caribbean, coupled with record inflows into the Russian Federation, drove this increase. There was a fall of 5% in flows to developing Asia but this region continues to absorb more than half of the FDI directed to developing economies in total.

 

The fall in FDI to developed countries was mainly due to reduction in the US, France and Germany, although the UK obviously bucked this trend.

 

According to UNCTAD the driving force behind the growth in FDI flows was cross-border mergers and acquisitions and large retained earnings kept in foreign affiliate companies, rather than investment in productive assets through greenfield investment projects.

 

UNCTAD estimates that FDI flows for the whole of this year will be close to the 2012 level, even though macroeconomic conditions are improving in some developed economies, although they envisage an increase in 2014.

 

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Posted in Foreign Direct Investment, UNCTAD

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