Global FDI flow stagnates

Global Investment Trends Monitor predicts that foreign direct investment (FDI) flows are expected to improve in 2011 despite a number of risk factors that are still at play.
The 2010 UNCTAD report -- Global Investment Trends Monitor -- has also said that the global FDI flow has stagnated in the year. According to the initial estimates for 2010 indicate that flows of foreign direct investment were stagnant on balance during the year.
Developing and transition economies now account for more than half of global flows, the fifth edition of the organisation’s Global Investment Trends Monitor said, adding that that developing and transition economies saw an increase that compensated for a decline in FDI flows to developed countries.
There was a strong rebound in foreign direct investment to developing Asia and Latin America, while Europe stood out as the subregion where flows fell most sharply.
Increases in reinvestment are the main reason that incoming foreign direct investment did not fall further. Cross-border mergers and acquisitions (M&As) were up, the Global Investment Trends Monitor said, but greenfield foreign direct investment -- the new investments -- declined.
The Monitor revealed that the trend in the form of entering foreign direct investment has changed since the global financial crisis began, M&As have been replaced by greenfield foreign direct investment as the main form of investment, but M&As are growing much faster in recovery.