The United Kingdom saw its inward FDI surge by $108 billion to reach a total of $165 billion, making it the largest recipient in 2005. The United States was the second largest recipient. Among developing economies, the list of the largest recipients compared with previous years remained stable, with China and Hong Kong (China) at the top, followed by Singapore, Mexico and Brazil. India received a only US$7 billion in FDI inflow. 

Regionally, the 25-member European Union (EU) was the favourite destination, with inflows of $422 billion, or almost half of the world total. South, East and South-East Asia received $165 billion, or about a fifth of that total, with the East Asian subregion accounting for about three quarters of the regional share. North America came next with $133 billion, and South and Central America followed with $65 billion. West Asia experienced the highest inward FDI growth rate, of 85%, amounting to $34 billion. Africa received $31 billion, the largest ever FDI inflow to that region. 

Global FDI outflows amounted to $779 billion (a different amount from that estimated for FDI inflows due to differences in data reporting and collecting methods of countries). Developed countries remain the leading sources of such outflows. In 2005, the Netherlands reported outflows of $119 billion, followed by France and the United Kingdom. However, there were significant increases in outward investment by developing economies, led by Hong Kong (China) with $33 billion (figure 1). Indeed, the role of developing and transition economies as sources of FDI is increasing.

Cross-border M&As, especially those involving companies in developed countries, have spurred the recent increases in FDI. The value of cross-border M&As rose by 88% over 2004, to $716 billion, and the number of deals rose by 20%, to 6,134. These levels are close to those achieved in the first year of the cross-border M&A boom of 1999-2001. The recent surge in M&A activity includes several major transactions, partly fuelled by the recovery of stock markets in 2005. There were 141 mega deals valued at more than $1 billion – close to the peak of 2000, when 175 such deals were observed. The value of mega deals was $454 billion in 2005 – more than twice the 2004 level and accounting for 63% of the total value of global crossborder M&As.

A new feature of the recent M&A boom is increasing investment by collective investment funds, mainly private equity and related funds. Private equity firms direct investments abroad are estimated to have reached $135 billion in 2005 and accounted for 19% of total cross-border M&As. 

According to estimates by UNCTAD, the universe of Transnational corporations (TNCs) now spans some 77,000 parent companies with over 770,000 foreign affiliates. In 2005, these foreign affiliates generated an estimated $4.5 trillion in value added, employed some 62 million workers and exported goods and services valued at more than $4 trillion.

The TNC universe continues to be dominated by firms from the Triad – the EU, Japan and the United States – home to 85 of the world’s top 100 TNCs in 2004. Five countries (France, Germany, Japan, the United Kingdom and the United States) accounted for 73 of the top 100 firms, while 53 were from the EU. Heading the list of the global top 100 non-financial TNCs are General Electric, Vodafone and Ford, which together account for nearly 19% of the total assets of these 100 companies.

Total sales of TNCs from developing countries reached an estimated $1.9 trillion in 2005 and they employed some 6 million workers. In 2004, there were five companies from developing economies in the list of the top 100 TNCs, all with headquarters in Asia, three of them State-owned. These five companies – Hutchison Whampoa (Hong Kong, China), Petronas (Malaysia), Singtel (Singapore) Samsung Electronics (the Republic of Korea) and CITIC Group (China) – topped the list of the largest 100 TNCs from developing countries.