FDI Flow an Analysis

As per the UNCTAD report on Global Investments, FDI for 2013 will remain almost the same as it was in 2012, $1.32 trillion with an expectation of 10% hike. Transnational corporations are expected to invest cash holdings in various areas. From $1.45 trillion of FDI in 2013 is to expected to go up to $1.6 trillion in 2014 and $1.8trillion in 2015. This growth will be subject to the changes in the global financial system along with the significant policy uncertainty. The proposed FDI recipients will be the developing economies than the developed ones.

Africa which has registered a year-on-year growth shows a rise in the FDI inflow up by 5% making it $50 billion. The outflow in the FDI also has risen to $14billion in 2012. Africa the favorite investment destination for the developing countries like India, Malaysia, China and South Africa in terms of FDI stock.

The extractive sectors in Mauritania, the newest oil producers in the Africa, Democratic Republic of Congo, Mozambique and Uganda are the major places where emerging economies invests. Other than extractive sector consumer oriented manufacturing sector also saw a growth in FDI inflow.

The whole of 2012 witnessed a decline in the flow of FDI in Asia from 7% to $407 billion which was much evident in South Asia where the FDI flow fell down to 24%. Among the top 20 FDI recipients China was third and Hong Kong was fourth other Asian countries including Singapore and India is also in this top 20 list even then the FDI inflow declined. The FDI inflow in East Asia and South East Asia was moderately increased but the decline in the South Asia hampered that too. Outflows from the region showed an increase in which Chinese outflow was $84 billion in 2012 whereas Turkey the main investor with 73% growth in outflow ie, $4billion in 2012.

FDI inflow in the Latin American and Caribbean in 2012 was almost the same as in 2011 which was $244 billion. The rise in FDI to South America caused a decline in FDI inflow to Caribbean and Latin American countries. Rapidly expanding middle class, natural resources including oil and natural gases are the main attractions of South America. FDI outflow in the Latin American and the Caribbean region witnessed a decline to $103 billion.