Global Foreign Direct Investment Inflows Surged 34% to $1.2 trillion in 2006: UNCTAD 

Global foreign direct investment (FDI) inflows surged 34% in 2006 to reach US$1.2 trillion, still short of the record $1.4 trillion in 2000, according to UNCTAD´s first estimate for the year. FDI flows to developed countries jumped 48% in 2006 to hit $800 billion.

The continued rise in FDI largely reflects high economic growth and strong economic performance in many parts of the world. Such growth has occurred in both developed and developing countries. 

  • Increased corporate profits and resulting higher stock prices have boosted the value of the cross-border mergers and acquisitions (M&As) that constitute a large share of FDI flows. 
  • Continued liberalization of investment policies and trade regimes added further stimulus. 

FDI by Region: 

  • The United States regained its position as the largest single host country for FDI in the world with $177.3 billion inflows, overtaking the United Kingdom, the top FDI recipient in 2005. 
  • The European Union (EU) as a whole continued to be the largest host region, accounting for 45% of total FDI inflows ($549 billion)  in 2006.
  • FDI inflows to economies in transition, comprising South-East Europe and the Commonwealth of Independent States (CIS), rose by 56% in 2006
  • FDI inflows to South, East and South-East Asia, and Oceania maintained their upward trend in 2006, reaching a new high of $187 billion, an increase of 13% over 2005. 
  • China ($70 billion), Hong Kong (China) and Singapore retained their positions as the three largest recipients of FDI in the region, while India ($9.5 billion) surpassed the Republic of Korea and became the fourth largest recipient in the region. 

Outward FDI from the region surged with China consolidating its position as an important source of FDI. India is rapidly catching up, with 2006 FDI outflows almost doubling. 

China and India are challenging the dominance of Asia´s newly industrializing economies as the main sources of FDI in the developing world.

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