Global FDI flows surpassed the
peak of 2000...
After four consecutive years of
growth, global FDI inflows rose in 2007 by
30% to reach $1,833 billion, well above the
previous all time high set in 2000. Despite
the financial and credit crises, which began
in the second half of 2007, all the three
major economic groupings - developed
countries, developing countries and the
transition economies of South East Europe
and the Commonwealth of Independent
States (CIS) - saw continued growth in their
inflows.
The increase in FDI largely reflected
relatively high economic growth and strong
corporate performance in many parts of the
world. Reinvested earnings accounted for
about 30% of total FDI inflows as a result
of increased profits of foreign affiliates,
notably in developing countries. To some
extent, the record FDI levels in dollar terms
also reflected the significant depreciation of
the dollar against other major currencies.
However, even measured in local currencies,
the average growth rate of global FDI flows
was still 23% in 2007.
FDI inflows into developed countries
reached $1,248 billion. The United States
maintained its position as the largest recipient
country, followed by the United Kingdom,
France, Canada and the Netherlands. The
European Union (EU) was the largest host
region, attracting almost two thirds of total
FDI inflows into developed countries.
In developing countries FDI inflows
reached their highest level ever ($500
billion) - a 21% increase over 2006. The
least developed countries (LDCs) attracted
$13 billion worth of FDI in 2007 - also a
record high. At the same time, developing
countries continued to gain in importance
as sources of FDI, with outflows rising to
a new record level of $253 billion, mainly
as a result of outward expansion by Asian
TNCs.
FDI inflows into South East Europe
and the CIS also surged, increasing by 50%,
to reach $86 billion in 2007. The region
has thus seen seven years of uninterrupted
growth. Outflows from this region similarly
soared, to $51 billion, more than twice
the 2006 level. Among developing and
transition economies, the three largest
recipients were China, Hong Kong (China)
and the Russian Federation.
...driven by record values of
cross border M & As.
Continued consolidation through
cross border mergers and acquisitions
(M&As) contributed substantially to the
global surge in FDI. In 2007, the value
of such transactions amounted to $1,637
billion, 21% higher than the previous
record in 2000. Thus, overall, the financial
crisis, starting with the sub prime mortgage
crisis in the United States, did not have a
visible dampening effect on global crossborder
M&As in 2007.
On the contrary, in the latter half of 2007 some very large deals took
place, including the $98 billion acquisition of ABNAMRO
Holding NV by the consortium of Royal
Bank of Scotland, Fortis and Santander - the largest
deal in banking history - and the acquisition of Alcan
(Canada) by Rio Tinto (United Kingdom).