OVERVIEW Global trends and prospects Global FDI fell for the third year in a row Global foreign direct investment(FDI)flows continued their slide in 2018,falling by 13 per cent to $1.3 trillion(figure 1).The decline-the third consecutive year's fall in FDI-was mainly due to large-scale repatriations of accumulated foreign earnings by United States multinational enterprises(MNEs)in the first two quarters of 2018,following tax reforms introduced in that country at the end of 2017. The tax-driven fall in the first half of 2018(which ended 40 per cent lower than the same period in 2017)was cushioned in the second half by increased Figure 1. FDI inflows,global and by economic group,2007-2018 (Billions of dollars and per cent) 73 ■World total Developing economies ■Developed economies Transition economies 2500 54% $1297 -13% 00 50 0 207208 20092010201201220132014201520162017201 Source:UNCTAD
Global trends and prospects Global FDI fell for the third year in a row Global foreign direct investment (FDI) flows continued their slide in 2018, falling by 13 per cent to $1.3 trillion (figure 1). The decline – the third consecutive year’s fall in FDI – was mainly due to large-scale repatriations of accumulated foreign earnings by United States multinational enterprises (MNEs) in the first two quarters of 2018, following tax reforms introduced in that country at the end of 2017. The tax-driven fall in the first half of 2018 (which ended 40 per cent lower than the same period in 2017) was cushioned in the second half by increased OVERVIEW Source: UNCTAD. FDI in ows, global and by economic group, 2007–2018 (Billions of dollars and per cent) Figure 1. 0 500 1 000 1 500 2 000 2 500 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Developed economies World total Transition economies Developing economies 34 -28% 557 -27% $1297 -13% 54% 706 +2% Overview 1
transaction activity.The value of cross-border merger and acquisitions(M&As) rose by 18 per cent,fueled by United States MNEs using liquidity in foreign affiliates that was no longer encumbered by tax liabilities FDI to developed countries dropped to the lowest level in 15 years FDI flows to developed economies reached their lowest point since 2004, declining by 27 per cent.Inflows to Europe halved to less than $200 billion; a few important host countries of United States MNEs registered negative inflows.(The repatriation of funds by United States MNEs translated into negative inflows in host countries.)FDI flows to Ireland and Switzerland fell to-$66 billion and-$87 billion,respectively.FDI flows to the United Kingdom also declined,by 36 per cent to $64 billion,as new equity investments halved. FDI into the United States declined as well,by 9 per cent to $252 billion-the average of the last 10 years.That decline was mainly due to a fall by one third in cross-border M&A sales.Australia's FDI inflows reached $60 billion-a record level-as foreign affiliates reinvested a record $25 billion of their profits in the country. FDI flows to developing economies remained stable,rising by 2 per cent to $706 billion.As a result of the increase and the anomalous fall in developed countries,the share of developing economies in global FDI increased to 54 per cent,a record.Their presence among the top 20 host economies remained unchanged(figure 2).The United States remained the largest recipient of FDI, followed by China,Hong Kong(China)and Singapore. The large-scale repatriations of funds by United States MNEs translated into negative FDI outflows,causing the United States to disappear from the list of the top 20 outward-investing economies in 2018(figure 3).Overall,outward FDI from developed countries as a group fell by 40 per cent to $558 billion.As a result,their share in global outward FDI dropped to 55 per cent-the lowest ever recorded.Nevertheless,outward investment by European MNEs rose 11 per cent to $418 billion.France became the third largest investor home country,with FDI outflows of more than $100 billion in 2018. Outward investment by MNEs from developing economies declined by 10 pe cent to $417 billion.Outflows from developing Asia fell by 3 per cent to $401 billion;investment by Chinese MNEs declined for the second consecutive year.Outflows from Latin America and the Caribbean contracted sharply. 2 World mestmen Report 2019Spd Ecom o
transaction activity. The value of cross-border merger and acquisitions (M&As) rose by 18 per cent, fueled by United States MNEs using liquidity in foreign affiliates that was no longer encumbered by tax liabilities. FDI to developed countries dropped to the lowest level in 15 years FDI flows to developed economies reached their lowest point since 2004, declining by 27 per cent. Inflows to Europe halved to less than $200 billion; a few important host countries of United States MNEs registered negative inflows. (The repatriation of funds by United States MNEs translated into negative inflows in host countries.) FDI flows to Ireland and Switzerland fell to -$66 billion and -$87 billion, respectively. FDI flows to the United Kingdom also declined, by 36 per cent to $64 billion, as new equity investments halved. FDI into the United States declined as well, by 9 per cent to $252 billion – the average of the last 10 years. That decline was mainly due to a fall by one third in cross-border M&A sales. Australia’s FDI inflows reached $60 billion – a record level – as foreign affiliates reinvested a record $25 billion of their profits in the country. FDI flows to developing economies remained stable, rising by 2 per cent to $706 billion. As a result of the increase and the anomalous fall in developed countries, the share of developing economies in global FDI increased to 54 per cent, a record. Their presence among the top 20 host economies remained unchanged (figure 2). The United States remained the largest recipient of FDI, followed by China, Hong Kong (China) and Singapore. The large-scale repatriations of funds by United States MNEs translated into negative FDI outflows, causing the United States to disappear from the list of the top 20 outward-investing economies in 2018 (figure 3). Overall, outward FDI from developed countries as a group fell by 40 per cent to $558 billion. As a result, their share in global outward FDI dropped to 55 per cent – the lowest ever recorded. Nevertheless, outward investment by European MNEs rose 11 per cent to $418 billion. France became the third largest investor home country, with FDI outflows of more than $100 billion in 2018. Outward investment by MNEs from developing economies declined by 10 per cent to $417 billion. Outflows from developing Asia fell by 3 per cent to $401 billion; investment by Chinese MNEs declined for the second consecutive year. Outflows from Latin America and the Caribbean contracted sharply. 2 World Investment Report 2019 Special Economic Zones